Brandhouse Retails Limited to list on March 27, 2009

The shares of  Brandhouse Retails Limited (An entity demerged from S Kumars Nationwide) will get listed on BSE and NSE from Friday, 27th March,2009. Earlier Shareholders of S Kumars Nationwide Limited(SKNL) were allotted 1 Share of Brandhouse Retails for every 5 Shares of SKNL held by them pursuant to demerger of its Retail Business Division as a separate entity(Record date was fixed as 02 May,2008).

The issued, subscribed and paid-up equity capital of the company post arrangement comes to Rs.51.99 Crores consisting of 5,19,94,195 equity shares of Rs.10/- each fully paid up. Out of these, around 1.07 Crore Shares are under lock-in period upto April 30,2012 . The Scrip is expected to list in a price Range of Rs.13-14 and settle around Rs. 12 after initial euphoria.

The Scrip Code is 533059 and the ISIN No. is INE317J01011

Current Shareholding Pattern

Promoters                    55.7%

FII’s                             24.0%

Body Corporates         10.1%

Trusts                           6.9%

Others                          3.3%

About Brandhouse retails (BHRL)

Brand Portfolio

With retail business of Skumars in its pocket, Brandhouse retail boasts of brands like Reid & Taylor, Stephens Brothers, Carmichael House, Belmonte and Dunhill.

Financials

For Year ended 31st March,2008 the company had posted a turnover of Rs. 313 Crore against 55 crore in previous year.

Net Profit after tax stood at Rs. 13.1 Crore against 9 Lacs in previous year.

The Earnings per share stood at Rs. 2.56 Company has minimal Cash of Rs. 42.5 Lacs on its Balance sheet. It has huge Debtors of 77.5 Crore and Inventories of Rs. 63 Crore which is typical of such business.

Some of the major Expense of company includes Rentals (20 Crore), Salaries (7 Crore), Exhibitions (2 Crore), Interest on NCD (3.6 Crore) and Brokerage charges(1.5 Crore)

Recent Developments

BHRL announced its joint venture with Italy’s leading apparel brand ‘Oviesse’. This brand would address young India and provide affordable ‘fast fashion’ for men, women and kids. The total equity investment in the JV will be Rs. 161 crores over 5 years for setting up of 190 stores across Metro/Tier1/Tier2 cities. In the terms of the agreement Brandhouse will hold 62.5% of the total equity while the balance 37.5% of the equity will be in the hands of Oviesse.

Oviesse is a part of Gruppo Coin, Italy’s leading clothing retailer with a turnover of over 1.1 billion Euros. Based in Mestre, Italy, Oviesse is a benchmark in fast fashion with over 11 million customers shopping at their store every year, which amounts to a sale of over 100 million garments at a revenue of over €820 million.

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Sensex to touch new high, "Vishal" listing today

Sensex to make a further new high today

Yes, We have touched a new high yesterday and yes, we would repeat it today. The sensex is on the roller coaster ride driven by all roundpositive developments. The Global clues are positive and so is the situation back home. Liquidity is ample and inflation fears have cooled down. Interest rates are also sitting quietly. The sensex which closed at 14806 yesterday after striking a high of 14828 is poised to post a new high today. Select Midcap stock would continue to remian in limelight. Watch out for Skumars, Welspun Gujarat, Bank of Rajasthan, South Indian Bank and Punj LLoyd.

Vishal Retail set for a "Vishal" listing !

Yes, that's not a news for most of the Investors. Vishal retail is all prepared to set the markets on fire and that too with a explosive listing. The company has issues shares to investors @ 270 per share. Investment Guru is of the view that the stock would list in the range of Rs. 550-600 and will actually move further up during the day. If the momentum persists, the stock may even touch the Rs. 700 mark today ! Investors who have got the allotment (lucky fellows!) are advised to hold their horses in the first few hours to take stock of the situation and then make up a mind to book profits. I would advice booking partial profits at a price above 700 and keep the balance to seek further appreciation if any.

For those who have been diappointed with refund orders in their hands ca make use of the first 15-30 minutes of the trading hours to make a entry into the stock so that they can catch hold of the stock near 600 levels and then play for the appreciation above these levels. The stock is also a good candidtae for a hold for a medium term perspective.

Skumars on the fire !

The stock has consistently been on my recommendation list and yes, finally it has performed to my expectation. All those friends who were skeptical about the stock's performance and had written to me about that would be smiling now ! Of course, if you are a investment guru blog reader, you are always set to mint money..ha..ha..ha..

Happy Investing!

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Stock Review : Skumars Nationwide

Skumars : Demerger to Unlock Value


Based on popular demand from the readers of the blog, I am putting up a review of Skumars Nationwide. This stock has been featured couple of times on this blog and of late, I have received enquiries from the readers on the non-performance of the company in terms of stock price movement.Let's find out answers to some of the questions.


Basic Information
Company : Skumars Nationwide
Sector : Textile
CMP : RS. 81.10
52 week High /Low : 87.40 / 35

How are the latest results of the company ?

The company has recently annouced the fourth quarter and annual results for the year ended 31st March,2007. Here are the findings :

Quarterly Results

Net sales of the company increased 49.93% to Rs 3,716.6 million for the quarter ended March 2007 from Rs 2,478.9 million for the corresponding quarter last year.

• Net profit declined 38.40% for the quarter ended Mar. 31, 2007. Net profit stood at Rs 218.3 million for the quarter ended Mar. 31, 2007 as compared with Rs 354.4 million for the quarter ended Mar. 31, 2006


• The EPS for the quarter ended March 2007 increased 36.05% to Rs 2 from Rs 1.47 for the same period last year.

Why a reduction in Net profit ?

• The above reduction in Net profit is due to an extraordinary item of Rs.160.5 Million on account of providing for the Transfer of assets on demerger.
• If we see the company's performance QoQ before extraordinary itmes, the Net profit has grown from 227.6 million in Q4 Fy06 to 378.8 million in Q4 FY07. This translates into a increase of 66.4% in Q4 FY07 over Q4 Fy06.

Annual Results

• Net Sales stood at Rs 12516.8 million for year ending 31st March,2007 as compared to 8932.1 million for FY 2006. This translates into a topline growth of 40% over previous year.


• Net profit has incerased from Rs.999.4 million to Rs. 1027.8 million in FY07 resulting in a growth of 2.8 %. However if we exclude the Extraordinary items, the company has deleiverd a Net profit growth of 138 % over FY06

Other Highlights

• FY07 Basic EPS stood at Rs.7.12 per share while the Diluted EPS stood at Rs. 5.36 per share
• Promoter holding as of 31st March 2007 stood at 42.27%
• FII holding in the stock as of 31st March,2007 stood at 36.29 %
• The stock has been added to the futures and option segment with effect from 14th May,2007.

What are the positives for the company ?

• The company is the only textile major that operates in all the products segments



• Company products range is designed to cater to all socio-economic segmnets of the economy and hence has an edge over its competitors



• The company is Market leader in Uniforms, #2 in worsted suiting and is the largest institutional supplier of textiles.



• The company's boasts of strong brands like Ried and Taylor, Skumars, Tamarind and carmichael house.



• Reid & tailor is a leader in worsted fabrics and Ready to wear while Skumars is leader in Blended fabrics, work wears and Uniforms. Carmichael house is a pioneer brand in Bed, bath and Table and Kitchen linen.



• The company has a strong distributional network comprising of 3000 dealers and 30000 retail outlets.

Demerger of Retail Business

Skumars business strategy for the coming years is to develop its retail wing and promote it as a major driver of its growth. The company's board has recently approved the demerger of its subsidiary Brand House Retail Ltd. (See Naveen Bhargava's story on Skumar's retail foray in his blog-Retail in India)

As per the Deerger Scheme the shareholders of Slumars Nationwide would get 1 share of Brandhouse Retail for every 5 shares they hold in Skumars Nationwide.

The company plans to raise the number of its exclusive brand stores countrywide from 90 at present to 1,000 in next three years. It is also planning up to tie with leading global brands to sell their products at its retail outlets.

You can read more on the Textile related stuff and news on SKumars on the fibre2fabric website.

If one believes in the consuption boom story in India, the retail sector has as tremendous advantage in exporing the vast opportunity that lies in tapping the Indian markets and growing purchasing power of the Indians. Skumar's initiative in demergering its retail division is a step in right direction and would help unlock the value for the shareholders of Skumars.

Private Equity Investment in Skumar's

Recently AMD capital, a Hong Kong-based private equity firm has announced its plan to invest $107 million in Skumar's. ADM plans to invest $82 million to acquire a 10 percent stake in S Kumars Nationwide and another $25 mn will be invested in Brandhouse Retail for another 10 percent stake in the company. The investment will be thorugh issue of convertible warrants.

Future growth plans of Skumar

• Gross Revenues of INR 900 crores (USD 200 Mn.) by 2010-11(EBIDT 13.14%)



• 20 Brands (across categories) managed by BHRL by 2010-11



• 552 Exclusive Brand Outlets for 20 brands by 2010-11



• Around I million sq. ft, of retail space managed by Brandhouse by
  2010-11

(Source : Business Presentation Skumars Sep'06)

Where is the stock price headed ?

Based on the current price of Rs. 81 the stock trades at a P/E of 11.38 which is quite reasonable. The stock is currently trading in a range of Rs. 70-80. The 50 Days moving average for the stock is at Rs. 76. The stock has been able to hold above this average for some time now which is a good sign. It has resistance at Rs. 74 and a major resistance at Rs. 68. For upward journey the stock is facing resistance at Rs. 82 and once it breaks the 82 levels convincingly and holds there for few sessions, it would head for a target of Rs. 90. Fundamentally, the company is doing well and the stock is reasonably priced at current levels. Investors are advised to wait for the demerger to happen to get the benefits of value unloacking for its retail venture.

Additional Information on Skumars

Company Website

Skumars Product Range

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