Buy Koutons Retail; target Rs 348: KRChoksey

KRChoksey has come out with a research report on Koutons Retail India Ltd. The research firm has recommended buy rating on the stock with a price target of Rs 348.
 
"We believe the company has performed well as compared to peers not only in terms of sales but also in terms of profitability. The company’s innovative family store model concept is getting good response and helping the company to expand with minimal capex.  We anticipate a double digit growth in the top-line during FY10 and FY11 to be driven by store addition (280 stores by end of FY10) and higher sales of ladies-wear (Les Femme) and children –wear (Junior). However, we expect the operating margin to stabilize at the current levels in FY10 and improve marginally from FY11 onwards. However we expect the net profit margin to improve by 50-75 bps in FY10 due to a) repayment of debt and b) refinancing the debt with lower rates which will further boost the profitability. At the CMP of Rs 348 the company’s stock is trading at 10.4 x its FY10 E EPS of Rs 33.5 and at an enterprise value of 5.7x its FY10E EBITDA. Based on our blended valuation, we arrive at a target price of Rs 456 for the company’s stock which represents an upside potential of 31.2% from the current levels. We thus recommend a BUY to the stock." says KR Choksey research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

.........