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basant
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   Topic: Titan replaces Educomp inTheEquityDesk XI
Posted: 11/Jun/2007 at 8:39pm |
We are replacing Educomp with Titan in our Equity XI. SOmehow I have felt that this Equity XI should represent a set of companies that have favourable risk reward equations. At more then 50 times Fy 08; lack of entry barriers and accounting policies that would indicate greater profits then the company actually earns investors are playing with almost negligible margin of safety.
It is very difficult to maintain wealth made from a bull market and equally easy to lose them. I therefore thought it necessary to replace Educomp with Titan in this team.
Now Titan is not cheap either but with Titan what we are getting is a Tata management with extremely high competitive barriers; the growth in Titan would be lower in Titan compared to an Educomp but if growth had been the only criteria we would have all been playing derby.
Please do not take this comment on Educomp as a conclusive opinion. If you are holding it or intend to buy it you can always do your own homeowrk and update us on the forum but for me the risks are far greater at rs 1789 (50 times current year) then at Rs 260 (8 times forward) when I had first spotted this company.
Edited by basant - 11/Jun/2007 at 9:19pm
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smartcat
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Posted: 11/Jun/2007 at 12:12pm |
Let's just say you recommend 'booking profits' in Educomp.
So now we have one more retail company in Equitydesk XI. Would it make more sense to compare Titan with Shopper's Stop or Gitanjali? Am I right in assuming that PEG ratio of Titan is more than 1? (overvalued, as they call it).
Jewellery sales and possible growth in eye care business - are these the future triggers?
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basant
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Posted: 11/Jun/2007 at 10:13am |
Organized jewellery market is just 4% of the total jewellery market. The total scale of opportunity is around Rs 50,000 crores! In that Titan thread I have listed the advantages of this business model. The main is the competitive advantage that the Tata name has been able to develop.
Unlike Pantaloon Titan is not a 50% + grower. Gitanjalli and Shopper STop are non comparables. The former is not the leader and also keeps diluting equity; the management is also not the best since they are going all across the globe in acquiring companies whereas the opportunity is in the demographic story out here.
Shopperstop on the other hand is largely a upmarket business model. if you see the financials it is costlier to Pantaloon. Titan on the other hand has a definetive niche people in the younger age bracket would buy from a Tanishq rather then from the old family jeweller!!!
Edited by basant - 11/Jun/2007 at 10:16am
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vivekkumar_in
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Posted: 12/Jun/2007 at 2:32am |
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Will Titan be able to show a higher Op. margin than other retailers like PRIL ?
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Often we forget there's a company behind every stock,and there's only one reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.
P Lynch
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tigershark
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Posted: 12/Jun/2007 at 8:19am |
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at the current price of 990-1000 titan trades at 35 times its 08 earnings based on an assumption that it will do a bottomline of 127 crs.so it trades at multiple equal to its growth rate. now does that make a good investment.basant could you pl elaborate
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understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things
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basant
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Posted: 12/Jun/2007 at 9:54am |
The visisbility for the growth rate is longer and also Titan could grow at closer to 40%. SUrely there are no multibaggers here but when you compare it with a Educomp it does look better from the risk reward angle.
If I had to buy any stock with equal PEG I would choose the one with lower growth and lower PE because finally all companies wil have to come down to the lower growth level.
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vivek.650
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Posted: 14/Jun/2007 at 5:29pm |
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It is good to include in XI but what is the future visibility of EDUCOMP solution as for as NP is concern ?Thanks.
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vivek
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basant
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Posted: 14/Jun/2007 at 11:58pm |
The risk reward looks unfavourable.
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