Osia Hyper Retail Ltd

Stock Opportunities Untested - but worth a good look
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Osio Hyper Retail Ltd
A retail chain incorporated in Gujrat but now expand its business to Uttar Pradesh.

  • Demand Drivers

  1. Growth in Revenue
    The company revenue is compounding with the CAGR of 34% over the last five years. The Current Revenue for the year is 1019 Cr.
    Its Close competitor Spencers Retail at the same time its Revenue at the CAGR of 2.9%

  2. Profitable
    The company is profitable with the operating profit margin of 6% and the Return on capital employed is at around 15.10%.

  3. Store Network
    The company has the retail space of 7 Lakh Sq. feet, with the store count of 37 stores.
    Its peer Spenser Retail has the total retail space of 14.7 sq. feet.

  4. Experienced Promoters
    Dhingra Chopra, whos is the key promoter of the company has the 20 year of experience in the retail industry, he is previously employed with the National Handloom Pvt. Ltd and is responsible for its expansion.

  • Challenges

  1. Intense Competition
    The organized retail is characteriszed with the intense competetion, many large foreign players trying to pernitrate the market, who have deep pockets and are trying to capture a peice of the pie of the market.

  2. ONDC threat
    The ONDC is an impending risk that can be a double edge sword, that can help brand to penetrate the market, but at the same time can also put several small retailers in par with the brand, leading to price wars, that leads to margin erosion in the long term.

  3. Real Estate
    Finding locations in high street areas are also becoming constraints, specially in Ahmadabad.

Why it is a Value Purchase
Has the Price to Books value of 2.24 Times substantially less than its competitors in the segment.
P/E of 25 ,Times less than its big players which are standing at the P/E of around 120 Times.
PEG ratio of around 2.18 Times.

Disclosure: Invested

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Competitor here is more DMart, Reliance Smart and Star Bazaar and not Spencer Retail.

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I have also invested recently in Osia after correction from 78 rs per share to 30 rs. level. Will wait for its q4 result to decide further.

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