Industrials

Report by Forensic Alpha

Inventory of finished goods has grown by 33% y/y (vs. 21% growth in revenues). Based on Q4 COGS, the DSI of finished goods has risen from 33 days at the end of FY22 to 41 days at the end of FY23. This may not seem like a large increase, but in an industry focused on “Just-in-Time” manufacturing, this is a significant move up. Whether this additional product can easily be absorbed into the market will depend on your view of demand in 2024. In any case, Forensic Alpha recommends investors to continue tracking inventory in coming quarters.