#6: Cold chains, Retail booms and some SAAS metrics
Reading more to find out a Sona laying "golden" eggs
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As you tune in, we take you through what’s brewing in different sectors
Loreal - A giant that keeps getting bigger
1) India Haircare market was Rs 26k cr in 2021 with top 3 players being L’oreal, HUL and Marico.
2) Highest growth category within haircare, salon professional hair care grew at 11.3% CAGR during 2016-21 and is estimated to grow 7.2 % CAGR during 2021-26
3) L’Oréal top 3 product segments combined commands ~60% of the market share
4) L’Oréal leads across haircare category – 50%+ in salon professional hair care, 30% in premium haircare and 20% in Hair colour
5) L’Oréal has doubled down in India with Rs 1000+cr investment in supply chain, reinforce production facilities and fund research and innovation.
Late-stage money in early-stage ventures
If you hadn't been noticing, there is mayhem going on in later-stage markets, but the seed market is alive.
Normal explanation: seed investing is disconnected from public markets, it continues regardless of the economic cycle.
Reality: Seed financing is 18-24 months of capital for a company to try or die.
Buying in the seed is simply buying a cheap call option, you both need the thing to "work" AND a higher valuation next round in 18-24 months.
Later-stage funds don't want to do their later-stage investing, so they are crowding into the seed market. This isn't economical for them.
Seed prices are high because a bunch of people are taking 1-3% of bigger funds and writing marketing-style checks
Cold Chain(CC) - The next Hot thing
- CC market <$5B; expected to grow @15%+ in next 5 years. Global CC;$585B by 2026.
- CC has 2 main services; temp-controlled storage & temp-controlled transportation.
- Sector issues; high capex, lack of standardization and high cost of energy.
- Growth drivers-regulatory requirements, consumer awareness, change in consumption habits.
- Potato is the most “cold-stored” item, occupying 68% of all capacity.
- IRR for a facility makes sense @80% capacity utilization.
- Semi-organized space covers 75-80%.
- India produces 400 MMT of perishables; wastage is 3-16%.
- India has 8186 storage facilities; capable of holding 40MMT of produce.
- Vehicles in cold storage transportation; 38% long haul, 62% short haul.
Recently Sona Comstar announced a huge milestone of producing 350 million differential gears since inception.
A Differential Gear allows a vehicle's driven wheels to revolve at different speeds when going around corner.
Differential Gears contribute 32% of the revenue and Sona holds a dominant market share of ~80 to 90% in India.
Sona acquired this technology from BLW (Germany) which made a breakthrough in precision forging, by which, the gears would directly be forged, instead of cut from blanks.
This technology reduces the cost of production of a differential gear by upto 30% and also eliminates the need for machining.
India Retail Boom
1. The Indian retail sector continued to gain momentum in 2022 as retail sales grew 20% YoY
2. As inflation slightly eased in the later part of the year, consumer spending held up well with a 10% YoY growth
3. As cities started opening up, many shoppers have gone back to physical retail and infact adopted hybrid commerce which is a mix of online and offline retail
4. Leasing in retail grew 21% YoY to ~5msf in 2022
5. Phoenix Mills has shown a healthy recovery since pre-Covid with most malls comfortably surpassing pre covid trading densities
6. Blackstone is expected to launch the Nexus REIT which houses its retail assets in 2023
Key SAAS metrics across different stages of business!!
1) *Pre Product Market fit:* - Engagement metrics: Who, what and how frequently your product us being used
- Proof of Value: How much users are willing to pay for the value derived from product.
*2) Early traction:*
- Most important metrics across stages post PMF remains “ARR growth”
- Gross Churn: How many customers stay with you post 1 year
- Payback time: How much time you are taking to recover CAC
*3) Early Growth:*
- Gross Margins: Margins arrived after deducting all direct costs to deliver the product
- Sales efficiency: Sales & marketing spend to add Net New ARR
- Net Dollar Retention: Expansion from existing customers base
CGT: Decoding the Code Inside our Body
Cell and Gene Therapy (CGT) next big thing in the biopharma market to revolutionize healthcare; Slowed down by manufacturing and commercial challenges.
Cell Therapy refers to placing new, healthy cells into the body to replace damaged ones; Gene Therapy a technique that modifies a person's genes to treat or cure disease.
The CGT was initially driven by focus on rare and non-curable diseases like oncology. Lately similar research is being conducted in cardiology, ophthalmology, obesity, etc.
Global players: Novartis, Merck, Amgen, Bristol-Myers Squibb, Lonza (CDMO), Catalent (CDMO)
Indian players: Intas Pharma, Laurus Labs (ImmunoACT), Immuneel Therapeutics, Stempeutics Research
Compiled by Hanu Bansal & Tushar Khandelwal
Contributions by Arnim Dhakad, Amay Solanki, Ashish Purohit, Anand Vadia, Mukund Maheshwari, Parin Detroja, Prachi Malpani, Tanay Lohia, Shlok Sanghi, Harshil Shah.
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