Why the stock is trading only at 10-11x??
As per concall, the management is focused on improving positive cash flows. Same store sales at 6-9%.
The company has a huge addressable market. Youth are already fitness enthusiast. But middle aged people of all income segments wish to join the Gym – they either look it as fashionable/trendy/impressive or the need arises out of any of the lifestyle disease. Whats more, post demerger, there will be a sharper focus on catering to the affluent Indians. Clubs, spa, message, health centers – where there are only a few listed players available at expensive valuations.
I became interested after watching a few people (whom I already knew for some years) got transformed into leaner and healthy individuals. Word of mouth is spreading fast…
Marquee investors like Prof Mankekar and Porinju are invested. Porinju had provided below rational for his investment in Jul16:
“So, today in the Indian market the market participants want numbers to come, then only they look at the stock. So, then it becomes expensive and people buy at very high levels, to get over-fancied. So, I always used to advice investors look for companies which are ignored and this theme of Adlabs and Talwalkars came to me because I was searching companies which have done very high level of capex in the last 2-3 years time. And on that capex numbers are yet to come. So, this is a theme. Not only these two companies, I am telling you, you can identify 30-40 very good companies especially in the midcap where these companies have done very good capex and I have seen some of those companies have done capex more than the market cap today and a reasonable debt. So, those numbers are going to come this year or next year or after two years. So, that is called value investing, that is where you can create multi-baggers and the stock may not be in fancy today because the numbers are not there.”
Read more at: http://www.moneycontrol.com/news/market-outlook/porinju-veliyathwhy-consumer-bizthe-tatas-is-doing-well_6963761.html?utm_source=ref_article