Prefer V-Mart Retail, says Rahul Arora

Rahul Arora, CEO at Nirmal Bang Institutional Equities told CNBC-TV18, "V-Mart Retail is a very interesting play, it has about 110 outlets. It is not a metro and tier-I player. If I am not mistaken, close to 65-70 percent of them are between Uttar Pradesh and Bihar. If you take a look at the GDP of Uttar Pradesh and Bihar over the last two years and compare it with the national average, it is far in excess for both of these and that has reflected in the V-Mart numbers over the last two years as well."

He further added, "This is a company that will probably open 25 stores over the next three years and they will generate about Rs 90 crore worth of operating cash flow, which will be used to fund this. It operates in margins of about 9-9.5 times which is far more than Trend, Shopper’s Stop and Pantaloon, but part of the reason is because they operate in an environment where the lease rentals would be lower and salary cost will be lower."

"For a company that will be probably giving you this kind of cash flows is trading at about 15-20 percent discount to any other larger guys. 30-40 percent revenue and EPS growth between here and FY17, we value the stock at about Rs 790. So it is probably in the retail space, it doesn’t have an FII window yet because 24 percent of it has been taken up by one fund itself, which is the FII limit that you have but it is a great stock for domestics if you want to play retail," he said.