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INVESTMENT INSIGHTS

Check Before You Invest : Vivid Mercantile Ltd

BSE: 542046 NSE: ISIN: INE647Z01025
  |   Sector:  Construction & Infrastructure   |   Industry:  Construction - Real Estate

Snapshot

Q.1 Which industry/sub-sector does Vivid Mercantile Ltd belong to?
Vivid Mercantile Ltd belongs to the Construction & Infrastructure sector, operating specifically within the Construction - Real Estate segment.
Q.2 Is Vivid Mercantile Ltd a good quality company?
Vivid Mercantile Ltd is a quality company, based on a multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Vivid Mercantile Ltd undervalued or overvalued?
Vivid Mercantile Ltd appears Somewhat Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 7.59 7.92
Price to Book 1.13 1.36
Price to Sales 2.01 4.06
EV to EBITDA 7.08 7.53
Q.4 Is Vivid Mercantile Ltd a good buy now?
Vivid Mercantile Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Vivid Mercantile Ltd?
Vivid Mercantile Ltd revenue growth is 120.1% for FY-2024, which is above its 5-year CAGR of -2.96%, indicating faster growth.

Q.2 Gross Profit margin of Vivid Mercantile Ltd?
Vivid Mercantile Ltd Gross profit margin which is the profit after deduction of direct costs, is 161.4% for FY-2024, which is above its 5-year median of 29.7%, indicating increasing margins.

Q.3 Operating Profit Margin of Vivid Mercantile Ltd?
Vivid Mercantile Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is -29.71% for FY-2024, which is below its 5-year median of 0.29% indicating decreasing margins.

Q.4 Net Profit Margin of Vivid Mercantile Ltd?
Vivid Mercantile Ltd Net Profit Margin is 133.38% for FY-2024, is above its 5-year median of 26.24%, indicating increasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 161.4 29.7
Operating Profit Margin (%) -29.71 0.29
Net Profit Margin (%) 133.38 26.24

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Vivid Mercantile Ltd?
Vivid Mercantile Ltd Return on Asset is 27.77%, which is above its 5-year historical median of 15.44%, indicating improved asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Vivid Mercantile Ltd?
Vivid Mercantile Ltd Return on capital employed is 34.91% for FY-2024, which is above its 5-year historical median of 19.44%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 14%, indicating value creation.

Q.7 Return on Equity (ROE) of Vivid Mercantile Ltd?
Vivid Mercantile Ltd Return on equity is 31.7% for FY-2024, which is above its 5-year historical median of 19.17%, indicating the business is making better use of its shareholders capital.

Q.8 Cash conversion cycle of Vivid Mercantile Ltd?
Vivid Mercantile Ltd Cash conversion cycle is 979 days, above its 5-year historical median of 259 days, indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.21 0.73
ROE (%) 31.7 19.17
ROCE (%) 34.91 19.44
Cash Conversion Cycle 979 days 259 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Vivid Mercantile Ltd?
Vivid Mercantile Ltd Debt-to-Equity ratio is 0.09, which is lower the industry average of 0.23, indicating lower debt levels in the industry.

Q.10 Debt to cash flow from operations of Vivid Mercantile Ltd?
Vivid Mercantile Ltd Debt to cash flow from operations is -0.22, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Vivid Mercantile Ltd?

Q.1 Promoter shareholding and pledge status of Vivid Mercantile Ltd?
Promoters hold 10.75% of the Vivid Mercantile Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Vivid Mercantile Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Vivid Mercantile Ltd vs industry peers?
Vivid Mercantile Ltd revenue CAGR is -2.96%, compared to the industry median CAGR of 0.00%, indicating slower growth and losing its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 120.1 0
Gross Profit Growth (%) 243.8 14.9
Operating Profit Growth (%) 0 10.4
Net Profit Growth (%) 199.1 17.2
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.21 0.1
ROE (%) 31.7 1.36
ROCE (%) 34.91 3.88
Cash Conversion Cycle (days) 978.75 439

Valuation & price assessment

Q.1 Stock return of Vivid Mercantile Ltd over the last decade?
Over the last 5 year(s), the stock has delivered a CAGR of 37.38% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 - 37.4% 32.6% -1.4%
Q.2 Valuation ratios of Vivid Mercantile Ltd vs historical?
The current P/E ratio of 7.59 is in line with than its historical median of 7.92, indicating that the stock is trading near its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 7.59 7.92 33.43
Price to Book 1.13 1.36 1.53
Price to Sales 2.01 4.06 5.23
EV to EBITDA 7.08 7.53 14.43

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