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Monday, January 21, 2013

Brandhouse Retail: Undervalued gem in Retail segment!

Brandhouse Retail is a undervalued gem in Retail segment, and boasts of premium brands like Reid & Taylor, Carmichael House, Belmonte and Dunhill. The firm is a part of S Kumars group and has more than 800 stores in 90 cities in India. With the opening of Retail segment for FDI, firms like Brandhouse will benefit with better investment at lower costs, better brand portfolio, advanced retail strategies, cutting edge technology and know-how from their global partners.

Financially speaking, the firm has provided decent topline and bottomline growth in past 5 years. Revenues have grown from Rs 552 crores in 2009 to Rs 783 crores in 2012. From the current quarterly runrate of 235 crores in Sep, 12 quarter, the annual revenues might touch Rs 1000 crores in next fiscal.

Another positive is good promoter shareholding at 55.78%, which has improved from 55.73% two quarters ago. Retail shareholding is at 21%.

Book value is at 28, thus firm is available at 60% discount to its Book Value. This kind of crazy valuations are available only in deep bear markets, and for midcaps and smallcaps, we are indeed in a bear market currently, although the Sensex and Nifty are roaring with support of large caps.

Technically speaking, firm is trading close to its support of 11.8 and next strong support is at 10.96, which is unlikely to break. Stock is trading in an narrow range of 11 to 17 from past one year or so. Once the overhead resistance of 17 and 18.5 breaks, better targets of 23 and 31 can be seen for this scrip.

Thanks for reading this post and keep writing in to us.


  1. You fail to mention that their EPS is decreasing every year for the last 5 years, that their Sept quarter and half years were DISASTROUS and that it is a perennial value destroyer. It deserves the price it receives in market notwithstanding the misleading P/B ratio. Why talk up definitive junk?

    1. EPS for last four years is 1.59, 3.75, 3.02 and 2.5, so there is no trend in EPS. It is neither going up or down.
      Also Sept quarter is barely in red with gross profit of 1.5 crores and EPS -0.05. So its not a big issue.

      What one needs to see is that they have 800-900 stores India wide of varying carpet area. It takes a minimum of 50 lakhs to setup a decent retail shop, meaning you would need 450 crores of investment to setup a business like this.

      Currently its trading at market cap of Rs 64 crores only, with debt of Rs 113 crores. Mr. Market is definitely very negative on this.

  2. Thanks for the write up. Promoters have pledged 81.13% of their holding. What is your opinion after taking this fact in?. Possibility of another Zylog?

  3. Overvalued Gem ? CMP is 1.95. My condolences to those who bought after reading your post !

    1. Yes, i have covered this mistake at top of my article here:


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