SHARETIPSINFO >>Research Reports >> BRANDHOUSE RETAIL LIMITED (08-08-2009)

COMPANY OVERVIEW:
Brandhouse Retail ltd (BHRL) is the arm of S Kumar. It was demerged from its parent company to focus on retailing of fashion garments, accessories and home furnishing of international and domestic brands.
The shares of demerged entity Brandhouse Retail ltd is listed on both the exchanges ie; NSE and BSE. The trading in the stock began on Friday, 27th March, 2009.
Brandhouse Retail is headed by Tarun Joshi the Managing director.
Currently BHRL operates exclusive stores for Reid & Taylor, Belmonte, Stephens Brothers, Carmichael House and leading international luxury brands like Escada and Alfred Dunhill.
BHRL has also inked JV with ‘Oviesse’- an Italian fashion retailer to launch its fashion brand in India.

Rational Behind Demerger:
To unlock the shareholders value.
To focus on the retailing segment.
Company is looking at the brand other than S Kumar. So they needed entity other than S Kumar.

Retail Network: The company has retail network of 683 store and is planning to increase it to 900 by the end of the financial year.

PRODUCT MIX:

RATIONAL FOR INVESTMENT:
The stock is trading at significant discount to its peers.
The business model is unique. The group company S Kumar is major player in the industry.
The model is to act as master franchisee in India. As disposable incomes of Indians are increasing they will demand more of international brands.
It portfolios include Reid & Taylor, Dunhill, Carmichael House, Stephens Brother and Belmonte. The brands are already established in India and have good recall value.
The company is in expansion mode and is looking forward to add few more international brands in the portfolio in the next few quarters.
It operates on pure buy-sell model. The production and distribution being done by the producers of the brand. This cut down the costs for BHRL.
The additional advertising will be the sole responsibility of the producers of the brand not BHRL. This again gives the cost advantage to the company.
The company has also entered into a Joint Venture with mid –price Italian brand Oviesse, aimed at adults and children.
Half of the current stores are through franchisee. This is done to reduce the cost.
The company also has good interest cover.

SHAREHOLDING PATTERN:

FINANCIAL:

Since stock is current listing, comparative figure in not available.
RATIOS:

Key Highlights:
OPM & NPM is comparable to industry average.
Interest coverage is healthy. This means lower debt.

VALUATION & OUTLOOK:
The stock is trading at 10X to FY2010E EPS. This is significant discount to its peers. The industry average PE to one year forward earning is 22X. We value the company conservatively at 15X to one year forward earning. We expect the FY2010E EPS to be Rs3. The fair value we arrive at is Rs45.

CONCLUSION:

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