Macfos Ltd – A hidden E-commerce company

“We successfully implemented a warehouse system during the previous year, enabling us to handle five times our previous order capacity. This infrastructure upgrade will be instrumental in supporting our anticipated growth in the coming years.”

Management commentary – Q4FY23

Stock data

Ticker	543787
Exchange	BSE
Industry	E Commerce

Price Performance:

Last 5 days	+13.86%
YTD	+64.48%
Last 1 year	+64.48%

Company description:

Incorporated in 2017, Macfos Limited is primarily an e-commerce company that sells a wide range of electronic items through its website and mobile application – Robu.in

Product Portfolio:

Macfos has an extensive portfolio of 12,000+ electronic items including robotic parts, drone parts, E-bike parts, IoT & Wireless items, 3d printers & parts, DIY learning kits, development boards, Raspberry Pi (Single board computers & Peripherals), sensors, motors, motor drivers, pumps, batteries, chargers, electronic modules & displays and various other mechanical and electronic components.

Own Brands:

1. SmartElex: SmartElex is a brand focused on electronic boards/modules and accessories and has 35 products under this brand.
2. Orange: The brand offers various electronic items such as Lithium based batteries, Motors, encoders, switches, power adapters, drone kits, etc and has 627 products.
3. Easymech: EasyMech brand is focused on mechanical items such as compression springs, Wheels, Couplings, Mounting Brackets, Robotics- Learning Kits, Aluminum extrusion profiles, spacer & standoff, bearings, etc and has 320 products.

Geographical presence:

As on September 30, 2022, Macfos Limited is connected with 140+ overseas and domestic vendors for sourcing electronic items and parts and has served over 2 lakh orders placed by over 83,000 customers from all 28 states of India and 6 Union Territories of India.

Order Fulfillment center:

The company has a fulfillment Centre in Pune, Maharashtra comprising 7,900 sq. ft. area and third-party logistics services.

Clientele:

ONGC, M&M, Hindustan Aeronautics Ltd., Tata Power Solar Systems Ltd., Central Electronics Engineering Research Institute, Pilani, Wipro Enterprises Pvt. Ltd., Bharat Forge Ltd., Tata Communications Ltd, Schneider Electric India Private Limited, etc are some of the prominent clients of the company.

Marketing:

The company has its presence across various social platforms including Facebook, Instagram & YouTube, and has 40,000+ subscribers/ followers over these platforms on a cumulative basis. In FY22, the company spent 1.4 crores on its digital marketing.

Financials:

What we like:  

1. The business cannot be easily replicated:

Though, from a bird’s eye view, you might find that the company is a mere e-commerce platform and anyone can create such a site but the business cannot be easily replicated. Presently they have more than 12000 SKUs, for 80 crores topline. Thus, revenue per SKU is less than 1 lakh! Sheer number of SKUs required in this particular line of business gives a moat to the company.

2. The company is able to generate decent margins over the years:

The margin the company is commanding, over a prolonged period of time shows that the company has a decent advantage in the business. The B2B and B2C segment is almost equally divided. Operating margins are 23% in the B2B segment, whereas it is 30% in the B2C segment.

3. Niche B2B clients add to the topline:

Quality of clients on the B2B side is very good. Under the offline channel, the company generally serves Corporates and large enterprises. Some of the esteemed customers which have been served by us include ONGC, M&M, Hindustan Aeronautics Ltd., Tata Power Solar Systems Ltd., Central Electronics Engineering Research Institute, Pilani, Wipro Enterprises Pvt. Ltd., Bharat Forge Ltd., Tata Communications Ltd., Schneider Electric India Private Limited etc.

Factors to consider:

1. Maintaining a high inventory could be a challenge for the company. The low inventory might drive the audience to the competitors website which again might hamper the sales of the company.
2. The company is primarily dependent on China for its raw material supply. Any geopolitical tension with the nation could affect the topline of the company.