Since the start of this year, promoters of Vaibhav Global, a multinational retailer, have sold shares worth Rs.1.58 billion. The latest selling took place in early June when director and promoter Nirmal Kumar Bardiya along with promoter entities sold shares worth Rs.1.34 billion. Motilal Oswal Mutual Fund bought most of the stock that changed hands. The entry comes at a time when the company has announced a buyback at Rs.1,000 with the promoters not participating. From a 52-week low of Rs.573 in October last year, the stock price hit a 52-week high of Rs.842 on June 10.
The rise in the stock price can also be attributed to a stellar Q4 performance where retail volume growth was 16.9%. Net profit for FY19 was up 37% at Rs.1.54 billion and overall volume growth was 14.2%. FY19 growth was encouraging both in the US and UK markets at 8.8% and 24%, respectively. Gross margins also expanded to 62.5% due to higher volume growth and lower B2B sales. A report from Nirmal Bang Securities states, “The company is further putting efforts to reduce B2B, an opportunistic business, which would aid in improvement in margins and working capital cycle,”
The brokerage also expects Ebitda margin to improve over the next two years from 11.2% from 13.5% due to its asset light model and increasing exports. The management has stated that there has been increase in the inventory listed on online retail stores such as Amazon and Ebay. At the same time, it is also expanding its product portfolio and customer base.
Despite the recent selling, promoter holding stands over 60%. Among the non-promoters, marquee investors Vijay Kedia and Ashish Kacholia hold 2.4% and 1.45%, respectively as per the March 2019 shareholding. Among institutional investors, Nalanda Capital, led by the equally reclusive Pulak Prasad holds 10.27%. Malabar India Fund has also been an aggressive buyer, having increased its stake from 3.72% in March 2018 to 6.99% in March 2019. However, Malabar Value Fund, which had a 1.07% holding in December 2018, does not show up in the more than 1% March 2019 holding.