Friday 19 May 2017

Value Pick - The Mandhana Retail Ventures Ltd - Being Human

Image result for being human poster salman khan
The Ace Investor
The Mandhana Retail Ventures Ltd
  Listed on both NSE: TMRVL & BSE: 540210
Currently trading around 193 with a market cap of around 440 crores.
Promoters hold 42.95% stake.
It has a Total Debt of around 19 crores.

The Mandhana Retail Ventures Ltd (TMRVL) is the demerged branded clothing business of Mandhana Industries. TMRVL is in the business of design, manufacture, retail, distribute: men, women, kids clothing & accessories as the Global Licensee of the brand Being Human till atleast 2020.

Being Human Clothing needs no introduction, The fashion brand under the Being Human NGO run by one of India's biggest superstar Salman Khan. The NGO with its philanthropic activities has evolved wonderfully over the years. Its fashion venture Being Human Clothing has also done great. 

Today TMRVL operates: 60 EBO (Exclusive Brand Outlets) stores of Being Human across India and 5 EBOs overseas in Nepal, West Asia, France, Mauritius. The company as per reported data as on Oct end 2016 had 650 Point of Sales in Total for Being Human by EBOs, MBOs, Franchisees and Online partnerships.

The company now wants to focus on Tier II, Tier III cities by opening 100 new Being Human stores in the next two-three years as well as focus on going global as per news reports.

As per recent Media Reports quoting the management. The company besides Being Human is keen to get into similar business partnerships with other celebrities not only with Bollywood Starts but also the Indian Sports Fraternity by releasing their labels and paying them royalties.

Lets now take a look at financials and valuations of the company :-

As you can see TMRVL is undervalued compared to two of its peers,  TMRVL is available at a P/E of 14x with Market Cap to sales of 1.85 while Indian Terrain trades at a P/E of 31x and KKCL trades at a P/E of 25x.

Both Indian Terrain and TMRVL have similar percentage of promoter stake pledged. So that should not be a major driving force in the rating mismatch.

At valuations of 30x TMRVL should trade at 417. That is a potential upside of 111% against current price of 197.

TMRVL enjoys the advantage of indirect and direct marketing and endorsement by Salman Khan as he sports the Being Human Clothing all the time at Public Appearances as well as in his movies. The key negative here would be the dependence on one brand Being Human and the Brand's dependence on one man Salman Khan.
However, The company's plan to tie up with other celebrities can negate this risk and dependence on Being Human Brand.
Plus: Salman Khan's friendships get him a lot of Models (other bollywood celebs) for this brand,  If Salman can get someone like SRK to also endorse the brand its going to get a lot of hype.

As per latest Shareholding Pattern filing for quarter ended March 17- Rakesh Jhunjhunwala holds 12.74% stake and Ramesh Damani holds 1.03% stake. Recently, ChrysCapital acquired 3% stake at Rs 200 per share.

Technically on the charts: If we plot the daily line chart we have a sort of falling wedge breakout in TMRVL which activates on closing above 200.

All in All, I feel this is a good under valued opportunity available in the market as the stock has not run up at all. With Salman's Tubelight releasing this Eid on 23rd June it can be another trigger for the stock. Tubelight has a Cameo of Shah Rukh Khan and both the superstars are going to be seen together on the silver screen after 10 years.

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have The Mandhana Retail Ventures Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.