Better economic growth, leaving more disposable income for discretionary life style consumption, rapid urbanisation, changing customer preference towards quality branded products particularly amongst the growing mass affluents, increasing nuclear families and Governments’ thrust on “Housing for All”, structural shift towards organised players post E-way bill implementation coupled with strong brand equity recall and distribution network, augers well for the Company. It has de-risked its growth strategy with an asset light business model, adopting a joint venture route.
We have valued the stock on the basis of P/E of 27x of FY20E earning. Stock is currently trading at Rs 564, after a sharp correction from Rs 974 recently. We have recommended buy on the stock with the target price of Rs 799 (~42% upside) in 18 months.