Sandeep Raina, AVP at Edelweiss RCM Research told CNBC-TV18, "Typically in any retail business, you will have the problems, growth is there but margins will not be there. Your valuation, your value will not be in terms of your working capital, it will be very high but this business is a very different business. This business only focuses on your apparels."
"Typically V-Mart Retail is not into tier-I cities, it is only in tier-II and tier-III cities where its products are in the range of Rs 100-1,000. So that is the kind of value this is creating for itself. If you look at the margins, 10-11 percent margins, return on capital employed (ROCE) currently at 25 percent will go up to 29 percent over the next two years. So if I just collabourate all those things, this looks a very good buy," he added.
"I buying a business where the mood is very strong, you cannot create that business easily, then also I have to buy business where ROCs and cash flows are very strong. So those are three-four things that we should look for in this market and not looking for cheap stocks or cheap counters which will not give us returns," he said.
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