Spencers Retail Undervalued retail story

I think you are talking about Nature’s Basket.

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Hi Sujay,

Yes sorry for that.Thank you for correcting me.
Also when I see the share holding pattern there is stake from Radhakishan Damani(2.09%) in Spencers. Equity intelligence(of Porinju Veliyath) is also invested in this company.

So whats your view on spencers now after Covid-19 breakout


My experience with Spencer’s is better than Bigbazaar, however I didn’t shop on it since the lockdown started. I find their online website & App horribly buggy and slow and it went more so due to huge demand since the lockdown, so chose to shop from Kinaras & Grofers.

Being a consumer of CESC, Spencer’s, visitors in their Shopping malls etc I can say that Mr. Sanjiv Goenka knows how to entice consumers. Same can also be seen how they.ve promoted and scaled up Saregama Carvaan & Too Yumm snacks. Tech is not their stronghold so they may loose out to eGrocers but in brick & mortar retail they have a good chance of success if they have focus on growth. Mr. Damani’s recent investment on Spencer’s is only a testimony to that.

Disc. Not invested but interested.


Hi Sujay,

Thank you for your valuable insights and sharing your experience.
Yes Regarding their website and App issue,flipkart should come as a savior.
But at this juncture not sure how that deal is working out and how much revenue will Spencer’s get from this tie-up.


Small correction: CEAT is part of Harsh Goenka led RPG group and not RP Sanjiv Goenka group

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Hi Sujay,

did you get a chance to review the results of Spencer’s for Q2? Their losses seem to have reduced wrt to the previous Q1 quarter. It also seems that their overall cost of sales has gone up( Sales vs Cost of Purchases). They have probably sold more high value products with a lower margins.
Their cash position seems to have strenghtened in this quarter.

Would be great to get your views.

Disclosure: Interested but not invested.

RK Damani reduces his stake in Spencer Retail per the Dec 2020 holding statement.

Spencer Retail keen to sell small stake in Spencer’s, Nature’s Basket’

If Spencer’s can rope in either D-Mart, or e-commerce leaders like Amazon or Walmart (Flipkart) it can be a big trigger for Spencer’s valuation, and the Spencer’s team will get access to retail expertise and scale which they sorely lack at this point of time. It will be a good deal especially for Amazon or Walmart to further strengthen their last mile, especially in Eastern India & parts of Southern India.

Disc: Token investment for tracking

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I agree on the scale part but can you elaborate why you feel Spencer team lack retail expertise? During entire lockdown, I guess Spencer, nature’s basket were only stores that operated unclosed throughout and served community well. I am aware of some nature’s basket store doing excellent ever since this pandemic and their team really rising to the ocassion.
Would be good to know contradicting views! Thanks

Disc. Have small tracking position and have been customer as well so maybe biased


My comment around retail expertise was around

  1. Low operating margins and ROE
  2. Stagnating sales. If I am correct their Same Store Sales Growth (SSGR) is not very impressive
  3. Inability to capitalize on the strong Spencers brand name & brand heritage

To me the biggest negative is docile management / promoters group lacking aggression. This is not just my personal opinion. There are several employee reviews in Glassdoor where they have mentioned that the management / promoters are not aggressive.

Having said that, some positives are

  1. Nature’s Basket has performed well, they are now EBITDA positive as per the management. If they can expand and scale up NB, this can be a big growth driver
  2. Valuations are very low at a Rs 650 Cr M-Cap for a Rs 2500 Cr topline and a Rs 100 Cr plus (It was Rs 85 Cr in H1 FY21) Operating Cash Flow

Spencers Retail valuations are very compelling. Samara Capital - Amazon bought out ‘More’ Supermarkets from Aditya Birla Retail in 2018 at a 1x Revenue multiple. If you discount by 50% Spencers should be valued at 0.5x revenue, around Rs 1250 Cr, which is 2x of current valuations. At Rs 650 Cr valuations, there is absolutely no downside in my view and this is a bargain buy for companies that want a good retail brand & footprint. If only Spencer’s management can get more aggressive and if they can replicate their success in Saregama, this has a potential to be a 2-3x in 3 to 4 years.


Spencers has assets worth 51/per stock. I think as soon as the economy opens up…This company shall be valued at 3-5x sales. Which means at least 3x from this price. The business which is in a growth sector, the management which has successfully guided many companies and the valuations which are mouth watering all provide comfortable convergence to enter the business. I seriously need a devil’s advocate now…

Update. A reliance fresh opened at walking distance from this store around six months back and Spencer store has shut down. My dad says its been almost 3-4 months and Reliance killed the business Spencer was getting. Now swiggy delivery centre has opened in its place.

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This Q results was a big disappointment for me. When all retailers be it fashion or grocery are posting 100% YoY growth in revenues or more…Spencers is still stagnant! Disappointing to the core…

The top CXO has been given extension of another 3 years…anyone having insight on its top leadership capabilities would be good to know? Can they bring in the growth that other retailers are seeing as they have been rewarded with another 3 years extension…??

There is no mention on any strategic investor coming in…which they keep talking about from time to time…

Overall, so far it looks like a huge potential story getting wasted. I have been holding it in small quantity because of the potential involved. Not sure when it will be realized.

Disc: Invested in small quantity hence biased & critical. Not a buy/sell recommendation. I can be completely wrong in my above assessments

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SpencerRetail_InvestorPresntn.pdf (2.5 MB)

Spencer Retail is the underdog of Indian retail scene and IMO very undervalued right now . The company has great brand value and from reading this thread I understand that the management is not aggressive enough which is a major concern . From the investor presentation we can see that the company is focusing on omnichannel retail also and has grown in that segment very rapidly by clocking a 4.5times growth in GMV compared to last year showing that omni channel retail can be major growth driver. In todays landscape many ecommerce and online only retail companies are setting up offline brick and mortar stores to deliver faster ( quick commerce) Spencers can capture market share in this segment since they already have a good network of stores and are planning to add more . Since Spencers offers groceries predominantly IMO the customer retention will be high ( non grocery items one can buy from any shop but groceries people tend to buy from the same place since they know the quality of product ) . One trend I have been noticing in my locality (Tier-2 city) is that people now are tired of online shopping after staying cooped up in their homes and they go out and buy from the shop directly . The reasons for ditching online shopping for groceries and essentials
are many minor inconveniences like minimum ordering amount is present so we cant buy small items ( most of tier2 and tier3 cities have more smaller purchases) , the items get mixed up and sometimes they wont send the item which we ordered , we might not be home when they come to deliver , the freshness of grocery cannot be assured always . Even in my family , during COVID lockdown we used to order online but nowadays we go out to the shop and buy required items . The point is that the business in brick and mortar retail shops will increase going forward . DMART which is a giant in offline retail has a P/E of around 220 and the total market share of organized retail in India is only a meagre 12percent . IMO Spencers has huge runway for growth and rerating . On the technical side of things it looks like 100 was the support and the CMP bounced up after hitting the 200day EMA and support level last week. Looking forward for valued inputs from fellow members regarding the path the company is taking now.

Disc : Taken position after the stock bounced up from 200day EMA at around Rs110 .All of the above are my assumptions and might be completely wrong ,please do your own research before buying this stock.


Finally some visibility of possible increase in otherwise near stagnant revenues of Spencer Retail

Was not able to find out investment details per new store or overall invest plan plan for next year or so on this new format.

From Nature’s basket buy to a new value format, is a totally different focus area…not sure if its best for capital allocation…thoughts welcome!

Is is known that Spencer closed its loss making retail chain in Kerala ?

Spencer’s Retail is a huge disappointment. It is a case of the promoters & the management running aground a hugely successful model and brand. Spencer’s have shut down all outlets in Chennai too. The promoters’ priorities are only towards their new venture - IPLT20 - LSG.

Chennai is the original home of Spencer’s Retail, the old Spencer’s from the British rule to the pioneering modern retail format launched in late-1990’s in Chennai. Spencer’s Retail have shut down their very old, high footfall & iconic outlets in Chennai and these outlets are in some of the most profitable retail locations where other retailers are expanding & thriving. All of the closed outlets are upscale marquee locations and retail spaces that any retailer would die to have. The Spencer’s management narrative of loss making or less revenue making outlets is not convincing. Either the promoters & management are not interested in geographies like Tamil Nadu & Kerala, or it is sheer incompetence

There has been a significant decline in qualitative & quantitative metrics around their business & business performance over the last few years since the listing of Spencer’s Retail, especially Gross & EBITDA margins, decline in same store growth sales. The management frequent narratives around the shift to high margin, non-food business merchandise over the last few years has not moved a needle and there has only been an erosion of margins and shareholder’s wealth since listing.

It is a sad state of affairs that a pioneer in modern retail format in India & an iconic brand is being run to the ground. The promoters could have sold off the retail business or at least a part of the retail business to derive some value


what do u think about the nature basket can they scale it?

Nature’s Basket is a very niche and high margin business with a fantastic potential to scale up across select geographies, but currently in wrong hands. Familiar story like Spencer’s Retail playing out in Nature’s Basket too. The -ve track record is there to see. Nature’s Basket revenues in FY21 [Check Page No 9] has come down post acquisition by Spencer’s Retail - Check Q1FY24 Results [Page No 9]

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