Market Cap: ₹ 41 Cr.
Bizotic Commercial Ltd is a Bse small-cap stock in the e-commerce sector.
The company operates in the fashion e-commerce industry with the brand name Urban United. Some of the products are found on famous e-commerce marketplaces like Flipkart.
Business Model
The bse small cap company, Urban United operates through two business models. The first model involves selling products through marketplaces and its own website. The company has 20 stores in Rajasthan and 1 in Bihar.
17 stores are on a franchise basis and 4 are owned by the company, located in Jaipur, Jodhpur, Bhilwada and Chittorgarh. This bse small cap receives a refundable security deposit from the franchisee to sell its products at the showroom.
Credit: Justdial
Management Analysis
Sanjay Gupta and Inderpreet Kaur are the founders of this fabric trading business based in Ahmedabad. Per their website, they expanded into the garment industry in Rajasthan within a year, forming Urban United.
Mr. Sanjay Gupta is the Managing Director and Promoter with 30 years of experience in the fabric business. Moreover, Ms Inderpreet Kaur is one of the directors with a decade-long experience in textiles and garments.
Financial Analysis
Some websites are showing that the company is operating profit positively, but when we did the actual breakup, considering other expenses, the operating profit came to be negative. However, if the EBITDA margins are observed to be increasing it implies that the company is likely to soon become profitable.
Picture: Earnings before interest and Taxes and its margins are improving
Why does this matter?
When a listed company is burning its cash, the Indian stock market gives it the lowest possible valuation. However, when the company posts its profit, the market revalues it on the higher end, benefiting the previous shareholders.
Sales Growth Aligned With Capex
The Sales Growth is showing a compounded return of 80.18%. With a Capex growth of more than twice when compared to the last year. The fixed asset turnover ratio which implies how well the company is generating income from its assets has grown 87% in the last 3 years which is a major tailwind for the company.
The debtor days for Bizotic Commercial Ltd (Bse small cap), is 148 days, which is close to the industry average. However, the company’s creditor days are more, indicating that it takes longer to pay its creditors. This is a positive sign, as it reduces the possibility of working capital problems.
The Fashion E-commerce Industry
According to a recent study conducted on fashion e-commerce players such as Nykaa, Meesho, Jabong, Snapdeal, Limeroad, and others, the Indian fashion e-commerce market size is expected to grow at a Compound Annual Growth Rate (CAGR) of 34% from 2023-2030.
The popularity of online shopping is on the rise, thanks to digitization and mobile devices. Sustainable fashion has also played a significant role in this growth, as Indian consumers are more aware of fashion’s environmental and social impact.
Disclaimer
The information presented here is for educational purposes only and should not be considered financial advice. Please do your own research before making any investment decisions.
