I couldn't post for a long time since i was busy in quarterly results and filling of various tax returns. In this period, I have bought Future Retail from Rs. 80 to 90, redington india at 120/- and Borosil Glass from 1750 to 1600/- Current market prices are higher but these still offer value. due to time constraint i couldn't write full analysis but i am posting small study here in this post in order to have some quick overview of these.
Future Retail and Redington India: Online retail is giving Offline retail a run for their money. Many has written off offline retail but there is more to this war than this recent burst. Online is relishing this burst due to huge inflow of equity money with which they can afford to give huge discounts to capture the customers and build scale. But I have serious doubt on customer loyalty in this model…customer is buying only because of lower price offered not because of it being offered from Flipkart or Amazon…brand loyalty is bare minimum at this level.
Sooner or later they have to think about profits and then there will be lesser discounts and lesser free deliveries. And we can’t just wipe out offline retail as they will also improve upon inefficiencies and wastages….changing their business model from one dimensional to omnipresent just like future group, reliance and likes of Raymonds has big plans for offering their products online. One can choose product online and can opt for delivery at his home or can pick up by self from the store located near his place.
Future Retail is having one of the biggest retail presence in india…they are improving their business model. Their Future consumer enterprise and Future Life style fashions have their own branded products like Tasty Treat, Sach, Clean Mate, indigo Nation, clarks, Mother earth etc which it can use for its retailing business giving higher margins.
Future Retail is having one of the biggest supply chain company, Future Supply Chain Solution ltd with 2.7 million square feet warehousing space. It is having a turnover of 521 crore with NP of 9.33 crore in 2013-14 (Don’t have figures for the first half of 2014-15, but these will be much improved). It was set up to handle the supply chain work of future group but of late sensing the huge opportunity in third party logistics it has started handling the logistics solutions of `other companies like Nestle, Mother Dairy, Coca cola etc.
Future retail is having 70% share of FSCSL and I am sure that with the astronomical valuations given to high quality logistic companies…Kishore Biyani will surely use the opportunity to sell a stake in FSCSL either to pare the debt of the group or further expand the business of supply chain business.
As I have mentioned earlier…Logistics business is not about trucks…but a high tech matrix of Warehousing, IT and transportation. Future Supply chain solutions and Redington India are having most advanced technologies in india for the same.
Borosil Glass Works: it is having a market cap of around 500 crore with cash holding of around 400 crore (Which it got by selling land)…hence its business is available at around 100 crore only which is having a turnover of around 170 crore. Borosil Glass is one which we can use over heat…for us it is a generic name for high quality glass. The company is having one scientific & Industrial products division which deals in scientific laboratories and other is consumer product division which deals in consumer products like Dinner sets, Trays and Bowls etc. This business is growing very fast over the years. La Opala RG has grown over 10 times in last 3-4 years…Borosil can replicate the same story here as it is having more than enough cash to fund any growth and diversification plans or with over 74% shares management can go for delisting also.
It is available in single digit valuations in spite of its being a reputed brand, efficient Management, high growth consumer business.
(Views are personal and should not be taken as a recommendation for buy or sell a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing)