Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Re iterate buy on Relaxo and Cravatex

with 9 comments

Both are good retail stories expected to grow your money over 30% compounded per annum for every year held.

Relaxo – Latest Q2 Sales are 30% up, so are employee cost, new stores expenses, its only a matter of time before net profits catch up after gestation and establishment expenses. Patient investors will be rewarded handsomely. Downside too is limited for this robust stock. No reason why it should not command PE multiple of 20+.  Even without PE re-rating 30% compounding seems no brainer.

Story for Cravatex has only begun and one should increase allocation as it become clearer that stores are making profits.

Read this link, its now been confirmed that new retail stores that stock FILA products should add upto Cravatex Ltds accounts.

There is no doubt as per next statement:

“The brand licence was bought about a year ago by Cravatex.”

This statement should make anyone’s heart throb who knows enough about investing:

“Most of the stores are going to be franchised.”

Both statements from this link

http://www.financialexpress.com/news/fila-india-set-to-roll-out-70-stores-in-three-years/683966/

If any one of you can provide feedback from new FILA store at Linking Road, Mumbai, it would be very much appreciated by all.

Where there is honey, bees will come, institutions will come even though they may be late, as mammoths can be expected, almost always. I have been digging institution bashing, should slow down a bit🙂 –  but seriously, when was last great stock discovered by an institution in previous bear market in India ?

Useful websites:

http://www.fila.com/global/changeregion

http://www.filagolf.com

http://www.fila.com/us/eng

http://www.fila.eu

Most importantly:

http://www.filaindia.in

Written by amitdipsite

November 16, 2010 at 7:44 pm

Posted in Uncategorized

9 Responses

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  1. Dear Amit,
    So what's your email id?:-)Any way mine is rahulonnet(at) gmail.

    I am following up with Cravatex to get response of my mails.

    So what else facts you got from management when you speak to them? Did they seem confidence and aggressive on expansion plans? How about cepex or they are going to be purely on franchisee model? if so then I am excited.

    Bye
    Rahul

    Rahul Kumar Paliwal

    November 19, 2010 at 3:35 am

  2. Dear Rahul,

    Thanks Rahul, my email id is on the link “View my complete profile”.

    It will be mix of franchise and company owned, whichever is more successful. They already have proline shop. A proline shop I have visited earlier the one in CP inner circle must be worth 50 Crore INR, rent must be 8 lacs per month, I don't know if its run by company or franchisee but there is no harm to add FILA apparels and FILA accessories in such an upmarket shop.

    If profits rise along with sales, then allocation of Cravatex in Portfolio should increase. Retail stories are decade long in growth phase atleast, so we have plenty time to make decision and observation. CS did not tell me about any expansion plans, that would be price sensitive information. Fact is, a lot of times even companies do not know in which state, or which mall, which city is their product will do well, otherwise companies won't be closing loss making stores… We need to make decision with incomplete information.

    Cheers

    Amit

    Multibagger

    November 19, 2010 at 4:05 am

  3. Hi Amit

    There is not much Volume in the share. Isnt that risky to trade in this share?

    brand update

    November 20, 2010 at 5:18 am

  4. Hi brand update,

    If you want to offload 2000 shares someday, it will not be possible with big price drop. Its a concern only if you need money urgently.

    I opinion on liquidity is documented in comments section of this post

    http://multibaggersindia.blogspot.com/2010/11/discuss-cravatex.html

    Regards

    Multibagger

    November 20, 2010 at 7:29 am

  5. From someone I know:
    ——————–

    Went to couple of shop-in-shop FILA stores.
    There is one at Madhapur called ROB which is essentially a shoe store. FILA had good presence in the store and lot of variety also, so both quality and quantity. The store also had fancy, sporty slippers from Nike, adidas, FILA etc. FILA slippers were anywhere between 250-350…nice looking stuff. There is another big store called Centrino at punjagutta, the most commercially prized location in Hyderabad. They have a big poster of Kim Clijster (she is a FILA sponsored) athlete. Inside the shop I saw again plenty of FILA variety : shoes, slippers. You know FILA has a very sexy collection of fleet shoes (you know the kind of we used to wear at school, but obviously much nicer). I was quite impressed with the fleet shoe collection. I saw 2 different customers wearing FILA shoes: one guy was wearing fleets, another was wearing the exact same pair I bought. The store also has first floor (I think it is the biggest shoe store in Hyderabad) and I was also treated to some FILA apparel: Ts, lowers, cut-sleeved-tshirts (the kinds you wear at gym). Interesting these are manufactured and marketed by Cravatex (which should mean more money I think). I of course ended up buying a really good looking red FILA collared T. It’s worth 599/-. A similar nike T would cost about the same or a little more, so Cravatex is not pricing the Ts at a really low price unlike the shoes. There is a clear price difference in shoes but not so much in Ts at least.
    I also saw FILA advertised in Reliance footprint stores (another big store at Somajiguda) and so it stands to reason that all reliance footprint stores will carry FILA. En route to Centrino, I saw in-between the road hoarding (you know the ones which are lit up and are square like, usually hung on road lamp-posts). So there were 5-6 of these by some Hollywood footwear and one of them was of a FILA shoes. Again a very very prominent store. It will be fair to say that FILA has good presence in these shoe stores and the story will only get better once there are exclusive FILA stores.

    It may be the case of ‘you see only what you want to see’ and universe starts giving you plenty of options. On my way home, saw a pillion rider on a bike holding a FILA shoe bag which of course had FILA shoe box in it. Smile. Well, on the other hand, for every FILA shoe pair I am seeing, there could be 10 nike pairs being sold. But FILA is really starting from 0 in India and there is a room for lots of growth. Margins on a T worth 599/- must be very healthy, I think.

    Multibagger

    November 27, 2010 at 8:30 pm

  6. Again from someone I know:
    —————————-

    Did go to Proline Fitness. The store manager was a little cagey…even I did not put him at too much ease. But he did tell me a few things:

    – Company owned store and they like to have control over the stores because of the good brand name that they have.
    – They have 3 stores in Hyderabad..in fact only 3 stores in whole of AP.
    – They have 65 stores all over India.
    – The business is OK. Either he was hesitant about proclaiming ‘business is doing awesome’ or it really is doing Ok.
    Basically company likes to open it’s own stores and control them and run them.
    – Also politely showed me their treadmills, since I mentioned I may be interested in buying one at some point in future. He seemed to know a thing or 2 about the equipment.

    – They also will provide repair and maintenance services.
    – The cheapest treadmill starts from 16K or so.

    All in all, I did like the store and the equipment.

    Multibagger

    November 27, 2010 at 8:32 pm

  7. Hi Manjunatha,

    Continental Petro is too small and risky at this stage. Small companies are good buys if they are growing at rapid pace or have good market share, over 25% in their category.

    Buying a 2000 Crore company like Shriram City Union Finance etc with certain growth of 25% per annum is better than that in my opinion.

    Glodyne also looks good to me.

    Regards

    Amit Arora

    May 15, 2011 at 5:56 am

  8. Hi Amit

    My question was on Confidence Petroleum.
    http://money.rediff.com/companies/confidence-petroleum-ltd/14560025/results-quarter

    Thanks & Regards
    Manjunatha.

    Manjunatha

    May 15, 2011 at 12:37 pm


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