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Vaibhav Global Q3FY13 results update

Contributed by Nirmal Bang

Result in line with expectation

- Vaibhav Global (VGL) posted a steady quarter in terms of Net Sales which grew by 16.5% YoY to Rs. 248.1 crore and by 13.9% QoQ. The steady growth in the Net Sales was attributed to the jump in sales volume in US by 64.4% YoY and UK by 75.1%, increase in customer registrations in US by 2.4% YoY though UK faced a marginal decline (US contributes 60% of revenue as compared to 30% from UK & Balance from Wholesale). The company has the strategy to reduce the average selling price to garner market share by increasing the sales volume. The average selling price per piece in US fell down to US$19 Q3FY13 as compared to US$25 Q3FY12 whereas, in UK it fell down to US$26 Q3FY13 from US$41 Q3FY12.

- The EBITDA was down by 26.9% YoY to Rs. 28.8 crore and up by 113.1% QoQ. The EBITDA margin was down by 310bps YoY to 11.6% in Q3FY13 and up by 550 bps QoQ. The margin was down on YoY basis due to the significant jump in employee cost and other expenses as a % of sales. The employee cost was 14.9% as a % of sales in Q3FY13 and 11.5% in Q3FY12. The Other expense was 43.5% in Q3FY13 as against 35.5% in Q3FY12 as a % of sales. The jump in Other expenses is attributed to the fact that the company has subscribed to free air broadcaster in UK which increased expenses, company also started six hour separate TJC channel which was making losses plus company also investing for the future growth where it has increased storing capacity (as Q3 and Q4 is a peak season).

- The PAT was down by 39.5% YoY to Rs. 18.7 crore and up by 171.3% QoQ. The PAT margin declined by 700bps YoY to 7.6% in Q3FY13 and was up by 440 bps QoQ. The jump in interest cost by 13.3% YoY and significant upside in tax rate negatively impacted the profitability of the company. The tax rate stood at 16.2% in Q3FY13 as against 6.6% in Q3FY12 and 14.6% in Q2FY13.