Jul 2025
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Warren Buffett wisely observed, "In the business world, the rearview mirror is always clearer than the windshield." Yet, to discern future value creation, one of the most telling indicators remains a company's ability to gain and sustain market leadership.
Among the many drivers of long-term stock price appreciation, leadership in our view is crucial. While investors may not always have direct access to a company's internal workings, what they can observe—and measure—is sustained market share gains. In our view, consistent market share gain signals strategic clarity and superior execution. Market share gains reflect not just internal execution capabilities but also external competitive advantage.
We believe the essential elements for market leadership blends a few critical capabilities:
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Building cohesive internal teams across the organisation.
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Understanding and serving external customers through relevant, evolving offerings.
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Developing strong distribution channels.
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Entering new markets and launching new products strategically
*Safari Industries India Ltd (Safari): A perfect blend of entrepreneurship and sharp execution.
As an illustration let’s take Safari, once an overlooked third player in India's luggage market, now a standout performer under the leadership of Mr. Sudhir Jatia who joined the company in 2011. Under his leadership, Safari has delivered a 25% revenue CAGR over the past decade, far outpacing the broader industry. From a market share of approximately 9% in FY14, the company commands 30% and is among the top three organized players as of FY25.
This transformation didn't happen overnight—it was the result of strategic, and disciplined leadership across key dimensions:
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Brand Building: Safari increased its advertising spend from 1% of revenue in FY12 to 7% in FY25, a bold commitment to brand development. The company launched premium lines, Urban Jungle and Safari Select, which are resonating well in the market.
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Investment in Talent and Manufacturing: The company restructured its teams, hiring high-quality professionals across marketing, sales, and production. In-house manufacturing grew from 7,000 bags/month in FY13 to over 1.3 million bags/month in FY25, supported by new capacity in Jaipur.
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Product Diversification to Expand Addressable Market: Recognizing the market shift towards hard luggage, Safari proactively launched compelling offerings in this segment, positioning themselves ahead of the market leader. They further expanded their addressable market by entering the school bag and backpack category, including strategically acquiring established brands like Genie and Genius.
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Agile Distribution Strategy: Starting with hypermarkets and Canteen Stores Department (CSDs), Safari swiftly embraced e-commerce and is now expanding its physical presence via exclusive brand outlets (EBOs)—a hybrid channel approach well-suited to today's consumer.
Interestingly, even without a deep understanding of every strategic move, the consistent trend of Safari closing the gap with the market leader in both revenue and profit growth served as a clear, albeit high-level, indication of their potential to emerge as a winner.
The Inverse Case: When Leadership could not drive market share
Conversely, we can observe the exact opposite trajectory in a storied brand like *Bata India Ltd (Bata), which has been steadily ceding market share to other listed players. Over a 10-year period, Bata has grown at a modest 5% CAGR, underperforming its peers at both the upper and lower ends of the market. While management has undertaken various measures—such as zero-base merchandising in top 100 stores, simplifying offerings, scaling sneaker brands, revamping stores, and launching premiumization initiatives—we've observed muted revenue growth. This subdued performance directly correlates with limited value creation for shareholders during this period, highlighting the critical importance of effective leadership in translating strategy into measurable market gains.
Conclusion
While leadership may not be apparent in financial statements, its impact cannot be underestimated in a company’s market share trajectory. For investors, closely monitoring market share trends speaks a lot about the quality of the leadership and offers a practical edge in spotting tomorrow’s winners—those not just with robust numbers, but also with the strategic clarity and execution to lead their industries forward.
Disclaimer: Investments are subject to market risks, please read all product /strategy related documents carefully before investing.
*These are investment ideas and there is no assurance that these will form part of client’s portfolio.
Fund Manager's Disclosure
• The fund manager, relative or associate may have financial interest in the subject company
• The fund manager, relative, associate or Alchemy, may have an actual or beneficial ownership of 1% or more or long/ short positions in the subject security(ies) for himself or for the clients.
• The fund manager or associate may have received compensation or other benefit in the subject security(ies).
• The discussions shall not be relied upon as advisory or decisions to buy or sell any securities.
