Retail sector has seen some major losses due to covid-19. Surely in current market conditions it seems companies like D-Mart and other retailers providing customers with daily essentials may seem to be winners as due to covid-19 has changed customer behavior and have led to panic buying .But as we slowly are moving out of the lock-down slowly but surely such stores may see reductions and loss in number of customers coming in through their doors.
Although easing of lock-down companies like D-mart may see decrease in sales but at the same time other segments will see a growth in their revenue as the lock-down eases companies like Trent (west-side), Future lifestyle and other companies which saw their sales going standstill due to closure of malls may see a revival in their sales.On an whole due to covid-19 the customer behavior has changed as well and its expected that the customers might prefer going to online portals and buying products than on offline platforms.
Overall the market has shown a lot of confidence in the retail sector during this lockdown and as overall they also have shown strong quarterly profits.As retail stores have been categorized as essential services during lock-down hence there is a scope of growth in the retail segment.
We have chosen 2 companies in retail sector Future-mart and V-mart
Strengths-Net revenue has seen an increase YoY ,Reported ebitda has been in 108cr YoY and Avg broker target has increased .
Weakness-Gross profit margin hasn’t seen a significant increase since 3Q17.
Opportunity –Retail space has increased in the last few quarters.tions of sales coming from third party bands.
Threats-Brand factory does not show an increase in revenue as much as other sources.Growth seems to have been lower in terms of the last few quarters.RPAT shows an increase showing a growing risk.
Strengths -quarterly revenue is increasing and yoy revenue is increasing company has no debt.
Weakness-increasing have expenses increasing wrt sales,operating profit decreased by 2% and Other Income
Opportunity -over 5 years cagr is positive,It is durable but expensive and shows low momentum.Negative PEG ratio.
Threats-net cash flow is declining,high PE more than 40. MFs increased holding net cash flow is declining,high PE more than 40.
Although there is an opportunity arising in this time of crisis