Buy SRS ltd with target of Rs.34

SRS ltd.

Faridabad-based SRS Ltd is a diversified player with presence in jewellery (>90% of revenues), retail and multiplex businesses.

In recent years, it has successfully scaled up its jewellery and multiplex businesses; they reported three-year revenue CAGR of 29% and 31% respectively.

Though most of these businesses have good long-term growth prospects, high geographic and customer concentration, low return ratios (owing to dependence on the low-margin wholesale jewellery business) and growing competition are key concerns.

Successful in entering and scaling up new businesses

Jewellery retailing on firm ground; wholesale is a drag on overall margins and RoCE

Expansion in the retail network to partially reduce dependence on the wholesale segment

Key risks: High competitive intensity and geographic concentration

Expect two-year revenue CAGR of 14%; valuation: fair value of Rs.34/share.

cmp Rs.25.75
The stock is currently trading at 6.11PE which is lower than peer companies
The stock is trading at 0.61PBV which means that you have more asset than the price you are paying.

target 34

% profit potential 30%