Hello Sir,

Hope you are doing well.

I was recently reading about Sastasundar Ventures.

Company operates in fast growing Online Pharmacy segment.

In the past, the company had a joint venture with Flipkart; the same has ended now and the company has started its own app.

The management has set an ambitious target of Rs 6,600 crore sales by 2030 against current TTM sales of around Rs 1,225 crore.

Below, we have shared our notes from the Q2 FY 25 con-call of the company to understand the outlook for the business.

 

Before that: Last week, we recommended a cyclical company related to food processing sector to our Alpha and Alpha + members

In last 10 years, the stock we recommended has gone through 2 major upcycles:

  • FY 15 – FY 18 – From FY 15 lows, the PAT of the company increased 10x by FY 18 and the stock price increased almost 20x from lows
  • FY 20 – FY 21 – In FY 20, the company incurred loss and in FY 21 the company recorded highest ever profit and the stock went up 5x from lows

FY 23 and FY 24 were again periods of downcycle. FY 25 started on a good note. Valuations are attractive and in case of an upcycle, it may again go through earnings and valuations rerating. You can read about it HERE

 

Sastasundar Ventures – Notes from Q2 FY 25 concall

– Business Focus:

  • Operates in the healthcare sector, emphasizing e-pharmacy and the B2B platform RetailerShakti
  • Recently resolved key uncertainties related to its Flipkart deal
  • SastaSundar app is now relaunched under a 100% owned subsidiary

– Financial Performance:

  • FY 2023-24 Results:
    • B2C platform (SastaSundar): Rs 863 crores revenue
    • B2B platform (RetailerShakti): Rs 489 crores revenue
  • FY 2024-25 Projections:
    • RetailerShakti: Rs 992 crores to Rs 1,000 crores
    • SastaSundar Healthbuddy: ~Rs 200 crores
    • Total revenue expected: ~Rs 1,191 crores (down from Rs 1,352 crores in FY 2023-24)
    • De-growth is offset by substantial growth in RetailerShakti, showing model resilience

– 2030 Revenue Targets:

  • Total revenue target: Rs 6,600 crores
  • SastaSundar: Rs 2,000 crores
  • RetailerShakti: Rs 4,500 crores
  • Aiming for a composite CAGR of 41%

– Operational Insights:

  • Highlighted RetailerShakti’s efficiency and scalability, especially in regions with limited e-commerce competition
  • Plans to launch a quick health offering requiring medical expertise for timely medicine delivery
  • Introduction of the Aadhaar trade-generic brand to enhance product range and improve gross margins

– Investment and Capital Management:

  • Cash – Rs 675 crores in cash and near-cash assets
  • Rs 145 crores to be invested in SastaSundar and RetailerShakti for growth initiatives
  • No plans to raise additional capital; focus remains on building a sustainable and efficient business.

– Regulatory and Competitive Landscape:

  • Non-compete clauses with Flipkart have been relaxed, allowing broader market operations
  • Regulatory risks have reduced due to favorable court rulings and evolving government e-pharmacy guidelines
  • Management sees changing consumer behavior as a positive driver for SastaSundar’s growth
  • Growing e-pharmacy competition noted, but operational efficiency and a unique business model are seen as key differentiators

– Customer Acquisition:

  • Leverage the Healthbuddy network
  • Conduct health camps and low-cost advertising to acquire customers

 

(End)

 

Disclaimer: This is not a recommendation to buy/sell Sastasundar Ventures. The securities quoted are for illustration only and are not recommendatory.

 

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

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