Vakrangee may test Rs 200, says SP Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, ""The Ricoh India has a tie up with my Mypacco, which is the global courier, logistics company, Amazon, because they have the last mile connectivity to the retail people. But before that, the main trigger is Wellington, which is again the top-five funds, the global funds, having USD three trillion under their command, they have bought 3 percent stake in the company on Friday, 15 million shares.""I do not know how much that has been in the public domain, but that has been a very big news. And if you see, the prior that, you do not have much of the foreign institutional investor (FII) funds, but Janus, again, has been holding 3 percent stake in the company, now, this Wellington. That means the top-10 funds of the world have 3 percent stake each in the company apart from 7 percent held by Life Insurance Corporation of India (LIC).""If you see the business model, they have, as I said, the Ricoh tie up in that direction only, it is a last mile retail connectivity, because people, Amazon, Ricoh, they cannot reach to the retail people or maybe to the remote area, maybe tier-IV, tier-V cities. So, they have Vakrangee Kendra is the concept which they have created; 15,000 Vakrangee Kendra of which 9,000 are in Rajasthan, 3,300 in Maharashtra and 2,500 in Uttar Pradesh. And if you see, of this 54 Vakrangee Kendras are in Mumbai, where one can go and see the situation.""I have visited their Andheri, just before taking a call and all that, the kind of rush you see, because they provide you everything. They provide you banking. Some people call it as an e-governance company, but this is a complete retail solution. And this is the future, because if you just see, I will give you one or two examples. If you want to reach to the banking, insurance, ATM, e-commerce, everything, they have got the licence from RBI to install 15,000 ATMs, for which 200 ATM trials have already been completed and they are the only company in India who will be having biometrics operated ATMs. Rest all ATMs which you are now seeing operated, they are not biometrics, they are not Aadhar linked. So, they have already completed 200 ATMs installed and operated and test trial runs have been carried out and they want to install 15,000 ATMs.""While interacting with management, if you really ask them can you achieve this target of 15,000 by 2020, because Tatas have also been given the permission to install 15,000white label ATMs by 2020. So, they say, we already have 16,000 Vakrangee Kendras and each Vakrangee will be requiring one ATM, because that is how if you want to provide the composite, the facility to the rural people, if you go into the remotest place also. So, they are catering for all the requirements.""They are in fact, called themselves the aggregator of aggregators because Amazon is an e-commerce company selling products of all companies. And they say, we deliver Amazon, we deliver Ricoh, we deliver Redbus; Redbus, again, the ticket which got sold for Rs 1,000 crore plus which was a start-up company. So, I see tremendous future, and if you come on the financials, FY16 will be having topline of Rs 3,000 crore, a service rendering company having topline of Rs 3,000 crore and earnings before interest, taxes, depreciation and amortisation (EBITDA) of Rs 800 crore.""Apart from that, the debt is only Rs 400 crore. They have evolved the franchise model, that means they do not have to invest anything on this creation of Vakrangee Kendra. On the contrary, they offer a composite package of about Rs 1,30,000-1,40,000 to have one Kendra in which they also make the money. And future, they will all be having sharing and all that. They have been catering to e-governance, Jan Dhan Yojana and all that. But the main trigger here is the FII interest, which they have started taking in and the stock has been continuously going up, it has moved to a high of, I do not know what was the 52-week high and low, but I think that it has a good potential, its market cap is of Rs 7,500 crore," he added."If you just take the valuation, one Kendra is valued at Rs 20,00,000 and they have the target of creating this Vakrangee Kendras, 20,000 by March, 2016 and they seem to be on schedule, because they have been creating about 1,000 Vakrangee Kendras every month. If you see 14,000 was at September end and now, they have 15,500. So, they have been creating 1,000 every month.""Taking all this into consideration, I think this is going to be, all this e-commerce companies and all that will be tying up with this company. Even banks are tying up. They are getting money from the banks to comply with that tier-II, tier-III, because they need to have 25 percent branches and they have white label, so now they have that advantage they have tie ups with 15-16 banks also. So, this is a future company which people have not understood in the right perspective.""They just call it as a technology company, or maybe e-governance company, but once the way FII investors are coming like Wellington, Janus already in that and LIC holding 7 percent stake, things are getting clearer and maybe the people have started taking a positive view, so this is a long-term stock, because eventual target of company is to create 50,000. If you see their September half yearly presentation which they have uploaded to the stock exchange, it says, 50,000 Vakrangee Kendras by 2020, which I do not think that it is not feasible or it is not achievable.""I am expecting a price of about Rs 200 in six months, but this is a concept stock. If someone can have it in the long-term portfolio, they can look for 20 percent appreciation every year for the next 3-4 years, but the near-term target for the next six months is Rs 200," he said.