Shankara Build Pro - Building Materials Organised Retail


(kanvgarg123) #61

They are momentum investors. Should have given a buy at 1000. The biz is same and everything else is same.
One thing I couldn’t convince myself is why Shankara is better than PC Jewellers. PC Jewellers has 34 TTM PE, 30% growth, Industry tailwinds, 15% + ROE . Hence sold out Shankara and bought PC Jewellers :slight_smile:
Watching this carefully and will add in case of deep corrections.


(Susindar) #62

After Gitanjali and Ganesh Jewellers, I tend to stay away from jewellers. It is a very discretionary spend and for working capital requirements, borrowings of jewellers are always high. Add to this gold is cyclical and it can fall which could bring real losses on stock in hand. On the other hand Shankara is first of its kind chain in India with a huge opportunity size. Also, industry tailwinds on construction and infrastructure which are driving forces of the economy will always be there. So I think it is a bad comparison between a jeweller and hardware store. Having said that, I do not own this stock as valuations are not comforting.


(kanvgarg123) #63

They hedge everything hence no inventory gains and losses. I am not expecting any fall in gold prices especially with the equity markets so expensive. Remember Gold used to be a safe haven and people have short memories. Any ahep fall in stock prices results in rise in gold prices which in case won’t affect PC Jewellers or even Titan :slight_smile:
P.S. - Most of their biz is B2C now and in future it will keep going up. The management is continuing the export biz because the inventory turnover is very fast there. Only thing which concerns me is high cash levels which are not being used to pare down debt. But I am giving them a benefit of doubt till FY18 closes as it will give a clear picture.
I hope that clarifies.


(Hitarth Panda) #64

Shankara building products opens its 125 th store in Mysore. It’s a 4000 sq.ft store.


(Akbar Khan) #65

Decent results
http://www.bseindia.com/xml-data/corpfiling/AttachLive/66157732-f209-459c-bc7e-be900e6ef03b.pdf


(Amit) #66

Pleased with q3 now. Same store sales growth is highly encouraging.

Disc: Invested and bullish for long only. Price action does not matter.


(Amit) #67

Shankara Building Products

Summary Notes from earning concall. Retail sales will take a much larger pie in next 2-3 years.

  1. Take over stores to increase geo penetration and strengething presence in new product categories
  2. Taken over operations of JP Sanitation in Bengaluru. Adds Plumbing, Sanitaryware and Flooring operations
  3. Last quarter took over Vaigai Sanitation in chennai. Turned around operations by cost control measures
  4. Last quarter launched e-commerce website to build omnichannel presence. This help in discovery process for customers and compliment physical store strategy.
  5. Last quarter started on a weak note. Weak October on back of festive season and a strnong monsoon in South India.
  6. Conditions improved in mid- novermber post GST rate updates. December was a good month.
  7. Retail Sale growth was driven by Lower GST rate increased penetration of our products and improvement in the overall sentiments
  8. Of the total Retail sales construction material constitute approximately 64%; interior exterior around 20%. Our new product categories are around 11% and agricultural product constitute around 5%.
  9. Continued target of same store sale at 20% or more
  10. The company has 12 processing facilities. The capacity utilization stood at around 90% for the quarter. Sales from our own products contributed around 60% of overall sales
    11.We are looking at around 15 to 20 stores per year kind of a number and we have already achieved that this year
  11. We possibly have already become with these moves one of the largest players in the country for leading brands like Kohler, Jaquar, Parryware, etc. and our ability then to leverage these across other geographies also becomes much more meaningful.
  12. The Channel part continues to be a very weak margin business and we have reduced revenues in that segment by 11% for the nine months period as well
  13. Enterprise side in terms of margin additive activities like customization, etc. are work-in-progress but they take a little bit of time to come into force.
  14. 30-35 crore capex including yearly 20 store rollout
  15. Own product sales is 60% of the overall revenues

(spvk1) #68


(Susindar) #69

As expected multiple levers are working in its favour. Addition in number of retail stores, same store growth rate, margin expansion and share of retail sales to the total sales of the company which resulted in 27% bottom line growth for the year. Available at a steep forward PE of 50, but definitely one of the stocks with expanding moat.


(Anirudha Limaye) #74

Whoa what is going on with Shankara today? They have analyst meets lined up in Hong Kong and Singapore today. The sharp ~20% downmove is very intriguing. Does anyone know of any news? thanks.


(Mahendra243) #76

For a growth of 16% qoq and pe at 55…needs some serious correction I think


(SD007) #77

Today is the last day for the Mutual funds to re-calibrate their portfolios as per their description of small/mid/multi or large cap fund. So a selling on their front could be the reason ? Just a guess.


(Anirudha Limaye) #79

While today’s morning fall did surprise me, I remain confident of this company’s prospects and held on. I am not a technical analyst (techies please chime in) but today’s price movement seems very positive to me. The morning fall was triggered by very small quantities. Such kind of movement is unusual even given the small free float of the company. But as one can see from the chart the surge up after 11AM came on large volumes. After a nearly 20% fall the stock even managed to break into the green 2-3 times in the day and closed about 1.5% down finally. Definitely not a day for the faint hearted, but a great buying opportunity for those who wanted to get in.

image


#80

Investor presentation shows 28 stores in Bangalore. Google maps shows up 7 locations while searching Shankrara build pro. There’s another location of steel world plus which belongs to Shankara. 25% digital presence on google maps is pretty bad coverage.
If a company can spend crores on organic and inorganic expansion, then they should at least enter locations of stores on google maps so potential customers can find them

MD was on a telephone interview with CNBC today. He reassured investors that in case of any queries please get in touch with us or even me personally.
There’s nothing wrong in asking company to put up stores location on it’s website under contact us section.


(Amit) #81

I am pretty sure seasoned conservative investors of the likes of kenneth andrade must have done enough of scuttle butt before putting his investor money in shankara…as per last Sp report 6 mf and many strong foreign portfolio investor ownership in shankara. We should not take buy/sell decision based on rumours. Better to hold and let dust settle down before making a rationale decision.


#82

Found a store locator here https://buildpro.store/stores . It’s also possible to place e-commerce orders for items.
Some recent acquisitions like 3 stores of JP sanitation haven’t been updated on google maps to reflect new identity.


(test) #83

I think each of us should decide for ourselves whether to buy / sell … Its never a good idea to take comfort from others conviction e.g. Bill Millers conviction in Bear Stearns … By the time the dust settled, we know what had happened


#84

Feel free to look at some pictures of the stores. 35% of all stores are in Tier 3 and 26% in Tier 2 cities
Value the business on a mcap/stores basis and see what you come up with.

https://goo.gl/maps/ykhKg9WBYEG2 Davanegra Karnataka
https://goo.gl/maps/EYW2wdb5xyT2 Nizamabad Telengana
https://goo.gl/maps/y1zXbf4csa92 Nellore Andhra pradesh
https://goo.gl/maps/k8YxAt2fuj22 Konnakunte, Bangalore
https://goo.gl/maps/7usAJBRV11S2 Auto nagar, Nellore,AP
https://goo.gl/maps/A5oFYDitQQ12 Secundrabad, Telangana
https://goo.gl/maps/edFSc6sMabH2 Coimbatore
https://goo.gl/maps/qGiGgygbWxF2 Beejadi, Karnataka
https://goo.gl/maps/sScsmwASe172 Kochi, Kerala
https://goo.gl/maps/H4aY5WEEKWC2 Kochi #2
https://goo.gl/maps/HcUygpYjXmw Mancherial, Telangana
https://goo.gl/maps/VV2xaZUVvZm Belthangady, Karnataka
https://goo.gl/maps/PmfwgjvnnGw Yelehanka, Bangalore
https://goo.gl/maps/ZUjajDUvr362 Mangalore
https://goo.gl/maps/GuLC58Ug1Hn Hyderabad
https://goo.gl/maps/b4S89gFW9Ry Zaheerabad, Telangana


(gautham1) #85

I see that they now sell branded products from kajaria, hsil, cera, jaguar etc. I wonder how shankara is doing well when these companies are having a very tough time. I know shankara sells other type building materials. But i guess there should be some correlation.


(us121) #86

More than 50% of their sales come from own processing.
Bad competirion at B to B level is not necessary to hv thinner margines for retailers. Especially where lots of business happens based on reliable words of retailers for specific brand or product. Also these products are largely one time usage and hence recommendation are sought for and valued.