DPS Kohli Chairman of Kouton Retail said that operating profit margins will sustain at around 19% for next year too. They are watching to increase their shop chain from current 1175 stores to 1800 in FY 2009. Business is mostly Franchisee based, thats why burden of fund raising is low.
Need of Rs.250 crores to Rs.300 cores this year for expansion will be fulfilled by taking debt.! Next Fiscal only (i.e. 2009-2010) company will come out to raise funds via QIB route. That means at least this year there will be no equity dilution which is good sign for shareholders.
Next year revenues will be Rs.1,500 crores & after taking into consideration burden of interest payout (around Rs.60 crores to Rs.75 crores); net profit for FY09 will be around Rs.140 crores. Annualised EPS will be Rs.45.75/-
Current P/E (as on 16th May 2008; market price Rs.750/-) is 33.20 times of earnings. Assuming the same P/E for FY09; Kouton Retail may go in the range of Rs.1500 to Rs.1525 next year.
That means from current market price upside is around 100% within a year.
With 1 year investment prospective 1 can hold Kouton Retails from "Retail Sector".
[In Retail sector Kouton is no.1 bet. Vishal Retail is also good. But because of further equity dilution plans its EPS will decrease. Vishal Retail can give returns of 25% every year in next 4 to 5 years.]
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