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ICICI Securities Report
We like the increased ad-spends in the quarter (4.9% of sales versus typical 2%) – these are good spends and we expect (good) brands to increase it in the near-term given most have under-invested for last two years; that said, only limited ones have the required headroom given the inflationary pressure.
Go Fashions India Ltd.'s Q1 FY23 revenue print of Rs 1.65 billion (up 42% QoQ and 16% above Q3 FY22) was great. Higher growth in large format stores (gross margin dilutive; salience of 23.1% versus 17.6% QoQ) and sharp increase in other opex (mainly ad-spends) led to (reported) Ebitda margin print of 32.1% (Q3 FY22: 36.7%).
We believe the brand has been able to create a replicable template of diverse product portfolio along with a highly efficient operating model of exclusive brand outlets.
Going forward, there is comfort on (product-level) margins and continued thrust on EBO store addition. Further, there seems to continued success in new products outside of core products.
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