Avenue Supermart: a compounding machine?


(msahani) #287

Keep going FK.


(phreak) #288

Flipkart is known to show losses even when there aren’t any to avoid paying taxes. For FY17, Revenues have grown to Rs.19,854 Crore - Up 29% YoY. Claimed Loss is Rs.8,771 Crore vs Rs.5223 Crore loss in FY16. Now the interesting part what I found in their expenses is an item for Rs,3,412 Crore which they are claiming as expense caused due to “fair value loss on derivative financial instruments” or some such. In other words, this is not loss from operations. So if you adjust this, The claimed loss will come down to Rs.5359 which is pretty flat.

Then there is tax dept.'s claim of Flipkart dodging taxes by giving profit back as discounts (And thereby incurring losses). These discounts help it build an intangible brand value in the balance sheet and hence should be considered as capex and not opex. So the losses are all mostly just accounting gimmickry and should be seen as such.


(msahani) #289

(thecroc) #290

I am always amused by the number of new products / alliances and expansion plans that come out every quarter from the House of Biyani’s. The only thing is I don’t find them truthful. He says no succession plan , but there are Biyanis all over in their companies, which brings you to the fun fact that may be they are the only smartest candidates for the jobs. They are indeed opposite of simplicity and definitely want to be super big before being decently profitable. The lack of focus on product quality is part of this complexity (based on amazon reviews of products and the fact that their products rarely lead anywhere but in Bigbazaar). I have a tracking position in Future Consumer because I want to see what this becomes.


(atul1082) #291

During my visits to big bazar, reliance retail and D mart ( in mumbai), I found D mart to be the best in bargain deals & big bazar, a big flop on quality and price too.They have a no of lousy private labels.


(msahani) #292

As Mark Twain said ‘It’s not what you don’t know that kills you, it’s what you know for sure that ain’t true’ applies to this guy perfectly.


(Darkwanderer79) #293

D-mart is always the best deal provider - comparing it to Hypercity and Big B. The outlets are forever crowded (thats why i prefer going there as soon as the stores open). Never found them empty even during weekdays.

This personal experience is what got me to invest in this stock. Otherwise Im “financial-gyaan” challenged.


(msahani) #294

(msahani) #295

(NATARAJAN) #296

#297

As I understand, The primary reason for slow addition of new stores is related to commercial property availability at reasonable valuation. As this seems to be difficult, management is right to steer the growth strategy in a different direction. So going forward they might go for franchise model. With this, growth will remain on course but at lower margins.

They can always go for course correction if they start getting the land at reasonable valuation after year or two.


(ad9) #298

Franchisee model?? or u mean set store on lease


(msahani) #299

(msahani) #300

RJ’s views on FK vs. ASL (from 17 min onwards). There ma be an element of biasness given his proximity to RKD.


(msahani) #301

(msahani) #302

ASL may be included in Nifty in the next reshuffle.


(msahani) #303

(Bheeshma Sanghani) #304

Not sure if anyone has noticed this but the Nifty has fallen from its peak on 29/01/2018 by 8.1% (11130 to 10226 ) while Dmart has advanced by 10.5% during the same period (1181 to 1306). Its too short a time to arrive at any quick judgments but it is certainly food for thought.


(Rushil) #305

It’s one of the few stories that are yet to be hampered in the minds of people due to the fall in markets.
Rest many counters people are starting to doubt their investment thesis.
Here a lot of optimism is built in and people are willing to pay exorbitant sums for the same. Would be interesting to see how the street would react if we have 2 quarters of 10 percent revenue growth.


(Peabody) #306

There are some organizations where sheer management pedigree lifts the stock prices and execution follows- Dmart is one of them in the Indian space.There is no point being cynical on what if scenarios. The whole world is crying wolf about valuation about this scrip and it has doubled. If growth slows down which eventually it will, scrip will not nose dive as everybody expects. Those who missed out on this stellar run-bad luck.