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Unlocking Value In The Consumer, Retail, And Logistics Sectors: The CAPEX To OPEX Opportunity

By AltG Innovation Centre On Behalf Of Poornima Vardhan And Taponeel Mukherjee

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In today's world with a high cost of capital, Indian businesses must optimise their balance sheets and unlock value. Two distinct classes of investors have emerged – those seeking high-growth equity and those pursuing consistent yield. Businesses that can employ financial engineering strategies to cater to this diverse investor base are well-positioned to benefit from the "CAPEX to OPEX" move.

For investors over the next couple of years, the ability to invest in and partner with businesses that can do so has the potential to generate significant returns. This applies across retail, QSR and specialised logistics sectors in India.

Let's delve into a case study of a retail chain to understand how such financial strategies can be applied and how value can be unlocked.

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This opportunity involves a midsize conglomerate, Godfrey Phillips and 24Seven, one of India's organised retail chains, specialising in round-the-clock convenience store formats, boasting more than 145 stores/kiosks spread across Delhi NCR, Punjab, and Telangana.

24Seven holds inherent value, especially in anticipation of the upcoming boom in the Indian consumer market. To maximise its potential, it needs to embark on a transformative journey that involves converting CAPEX to OPEX and diversifying its investor base.

The APEXX Formula suggests that a significant value-unlocking opportunity lies in spinning out the 24Seven business from Godfrey Phillips and adopting an aggressive, asset-light franchising strategy. This shift enables the business to leverage the capital of franchisees and partners, resulting in a more agile and scalable operation and potentially create at least $10 billion in market capitalisation over the next decade.

Disclaimer: Any views, comments or communication (above or in the past) should not be construed to be investment advice by Alternative Growth (hereafter referred to as “AltG”) in any form whatsoever. AltG does not make an offer to sell or solicit to buy any securities.


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