Business like this which is common you will find hardware shop steel suppliers cement suppliers sanitary tile supplier paint shops in most suburbs in india. especially small hardware store which is very lucrative. SBP IS ALL UNDER ONE ROOF AND DISCOUNT PRICE LIKE DMART IN CONSUMER FOODS SBP IS SUPERMARKET FOR HARDWARE NEEDS.
In india we do not have listed player however international we have many players like The Home Depot, Lowe''s, Menards In, Bunnings, B&Q and Mitre 10..... Average PE of these company is around 27 in a mature environment with tipped growth.SBP OFFER PRICE IS AT 21 PE SO LOT IS LEFT IN TABLE
Shankara Building Products is trying to model it business under this home improvement centre in market like India which very unorganised today if i go to buy steel from local traders chance of getting inferior material or low tonnage is part and parcel on local traders. With SBP we are getting an organised players selling all home building or improvement under one roof which is win win situation both for SBP and we Customers
With regards to Real estate slow down we are going to worst face it cannot getting worse then this also case of steel and cement price
NOW let see the valuation they asking Rs 460 which gives it a PE of 18.33 on annualised EPS of 25.33 from 9th months result which also included two months of denomination effect not sure how much it effect its balance sheet.
GMP still not started enquired from my brokers however this will be very good IPO to apply will not be surprised once people understand this business model GMP will start
Now to DCF from past CAGR is around 25% which great from a 13 EPS 2014 to grown to 26 EPS 2017 for the full year (estimate) however just to safe i take half of it which around 13% and also discounting it by 11% the future earning so worst come worst THE FAIR VAULE I GET IS RS 541 YES A GOOD Rs 81 left for investor.
IMO this another DMART will not be surprised 100% gain from issue price over one to two years or soon bcoz worst come worst this will list price am getting Rs550 with25% MIS
SO APPLY FULL ON FIRST DAY ITSELF
Initial Cash Flow: $55,00,00,000
Years: 1-5 6-10
Growth Rate: 13% 15%
Terminal Growth Rate: 5% Discount Rate: 11%
Shares Outstanding: 2,28,49,297 Margin of Safety: 25%
Debt Level:
Year Flows Growth Value
1 62,70,00,000 14% $56,48,64,865
2 71,47,80,000 14% $58,01,31,483
3 80,77,01,400 13% $59,05,84,302
4 91,27,02,582 13% $60,12,25,461
5 1,02,22,26,892 12% $60,66,41,907
6 1,14,48,94,119 12% $61,21,07,149
7 1,27,08,32,472 11% $61,21,07,149
8 1,41,06,24,044 11% $61,21,07,149
9 1,55,16,86,448 10% $60,65,92,670
10 1,70,68,55,093 10% $60,11,27,871
Terminal Year $1,79,21,97,848
PV of Year 1-10 Cash Flows: $5,98,74,90,006
Terminal Value: $10,51,97,37,748
Total PV of Cash Flows: $16,50,72,27,753
Number of Shares: 2,28,49,297
Intrinsic Value (IV): $722.44
Margin of Safety IV: $541.83
What Percentage of IV comes from 64%
the Terminal Value:
Zerodha (Trading Account)
RHP
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