Brandhouse Retail

 

Brandhouse Retail is a part of S Kumars group. This company is a retail master franchisee for international textile brands. This company caters to brands like Reid & Taylor, Stephens Brothers, Carmichael House, Belmonte and Dunhill. The company currently has about 800 stores in 90 cities, covering an area of close to 9 lakh sq ft.

If you look at the financials of the company, for the first nine months, the company has done sales of about Rs 500 crore which is up by about 23%. PAT (profit after tax) is about Rs 19 crore which is again up by about 50-55%. The company's equity is Rs 54 crore which means and annualized EPS of Rs 5. The stock currently trades at about Rs 35 which means a price to earning multiple of about 7.

If you compare this company with other retail companies like Pantaloon, Shoppers Stop, Provogue, or Kewal Kiran, you will find this company highly undervalued on various parameters. None of these retailing companies are available at a PE multiple of less than 15 and some of them are available at PEs of 40-50 also. This one is available at about 7 PE. If you compare it on various parameters like marketcap to number of stores, or market cap to the total floor area of stores, I think company looks undervalued on various counts.

The big opportunity for the company is that there are number of international brands, especially from Europe and US which are wanting to make a foothold in the Indian market because markets in those countries are saturated. So Brandhouse Retail having demonstrated its ability to open and manage stores for them, maybe is a strong contender for any opportunities which may come from retailing companies in Europe and US. So at Rs 35, this stock maybe a good value buy.