Business & Economy Magazine IIPM News Edition: April 2010

Wednesday, April 28, 2010

Despite the dilemma, which the industry is facing, aviation stocks seem to have suddenly caught the fancy of investors.

Ratan Lal Bhagat questions this big run-up in Indian skies...

“I invest my money in stocks which give me good returns, irrespective of the company or the sector. If the market is optimistic on the future of the aviation sector, then I won’t hesitate in investing in it, even if the sector has been in bad shape for quite some time now,” avers Lalit Ahuja, a former employee of Indiabulls Securities and now a businessman, who still has a hawk eye on the stock market.

Even Prakash Bhatt, an avid day trader, believes in somewhat same philosophy. “As the economic recovery gathers steam, I feel that the Indian aviation sector might bounce back in no time. In fact, I have made some really good money trading in stocks of domestic aviation companies during the last one month,” he tells 4Ps B&M.

No doubt, investors like Lalit and Prakash are well aware of the fact that investment in the share market is certainly a big gamble (What else would you call Sensex’s roller coaster ride from 21,000 points to 8,000 and then back to over 17,000?). They know it’s the right acumen with proper market study and projection that becomes imperative before one dishes out his hard earned pennies on any stock. But even then they are betting big on the Indian bourses, particularly, on the stocks of domestic airline companies, which are in a financial mess at the moment. And, it’s not just the two of them. In fact, there are thousands, or rather say millions of such Lalits and Prakashs who are busy reaping profits by investing their hard earned cash in the stocks of the domestic aviation companies.

And why not? In the last one month alone, the stock prices of almost all the domestic aviators including Vijay Mallya’s Kingfisher Airlines, Naresh Goyal’s Jet Airways, or even for that matter SpiceJet, the budget carrier financially backed by US-based billionaire Wilbur Ross, have all moved up a whopping 23-66% (Interestingly, the benchmark index Sensex merely rose by 4% during the same period). What’s more? The rally has been accompanied by an over 300% increase in trading volumes of each of these listed stocks. So what is it that makes the stocks of these domestic aviators a perfect catch?

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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Friday, April 09, 2010

SLOWDOWN? OR SHOWDOWN?

When slowdown comes as a blessing, what do you call it? Showdown? Shoppers Stop is one entity that took quick advantage of the bad times

The slowdown fever has even forced the country’s first departmental store – Shopper’s Stop to resort to many changes. And such changes (or ‘adjustments’ as it prefers to call it) range from financial policies to distribution practices. Changes, adjustments or whatever else you may call it, but these most recent moves have really been helping this retailer during times of slowdown. Sure enough, investors too have been particularly pleased with the changes, as during the past 10 months (till September 2009), Shoppers Stop gave back investors a massive return of 68%.

So, was the massive logo change exercise undertaken during 2008, a part of the combat strategy against the slowdown? Question senior officials at Shoppers Stop on this, and all they deny the fact that the move came about as a consequence of recession. Rather, they claim, it was a shift in focus to transform itself into a gen-next brand. But as the financial tale goes, before the year 2008 began, the company had incurred losses during Q2 & Q3, 2007-08. The respective figures stood at Rs.25.6 million & Rs.256 million. Apparently, the slowdown fever that gripped this retail giant forced it to undertake immediate and radical alterations in structure and brand policies to bounce back.

“We thought, we should convey the message of what we have achieved and how we are unique in providing our customers the best of shopping experience. Therefore, if truth be told, the logo change was not due to the slowdown,” B. S. Nagesh, MD, Shoppers Stop told this magazine. Then there was also a change in positioning that was undertaken, doubled-up with a merchandise revamp and increase in retail penetration. This year saw Shoppers Stop do it all. And it did help the group. As compared to just a year back, the decline in same store sales (SSS) for August 2009 was a small 2.5%, an improved figure as compared to the 7.5% decline in June 2009. Losses from other formats such as Crossword, Mothercare and HomeStop have also declined and most of them are nearing break-even levels. Sources in the company also confirm that by 2010, these new formats would start contributing positively to the company’s earnings. Sure enough, the slowdown seems to have come as a blessing in disguise in more ways than one. Here’s a first-hand confession from Nagesh – “There’s a real-estate problem, which all the retail players have to face, but we as a group, came up with strategies that will help us to cash in on the threats,” explains Nagesh. Not a hollow boast, as during 2009, Shoppers Stop has been able to renegotiate new properties at lower rentals, which helped lower its debt burden. Slowdown times? Really? What slowdown?

Angshuman Paul

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.