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Value buys - The intrinsic value is close to market price
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Topic: Rayban Sun Optics- Co. has cash Rs30share

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Vivek Sukhani Senior Member Joined: 23/Jul/2006 Online Status: Offline Posts: 6675	Posted: 26/Aug/2006 at 8:57am
	Ajith and Basant, I really dont know how I end yp getting against both of you all the time, but seriously speaking I get there quite unknowingly. Coming to Rayban Opticals, I have certaun questuins to ask: 1.The company isnt paying any dividends, am I correct? 2.Price to Book is 2.5 times. 3.The book value I beleive is primarily built up with share capital and securities premium account.It has come yp with rights in 1993(1:2) and 1997(4:7).I beleive share premium account should be treated at par with share capital... after all you can also become cash rich by getting money from your dad.... 4.Net Operating Income per share is just Rs.20.Which shows that sales level is pathetic given its Equity capital. On the plus side, however, there are also some other things: 1.Good Current ratio & Quick ratio 2.Debt-free. 3.Operating margin is increasing. Now, its a tricky call, if you ask me.I will have to see, how much margin expansion is possible. How much is volume expansion possible.Straightforwardly speaking, it doesnt merit an investment at this level.Wait for the time till the management declares its maiden dividend.
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Ajith Senior Member Joined: 06/Aug/2006 Location: India Online Status: Offline Posts: 1284	Posted: 17/Sep/2006 at 11:10pm
	Vivek,Mr. Basant As you note the current and quick ratios are excellent.The main plus is market leadership-Rayban is dominant in the midpremium segment and a host of brands command a good share of the designer segments though there is competition from the liks of Armani,Police... Rising disposable incomes,fashion trends all favour a spurt in demand and meeting this does not require any capital investment in the designer segment and there is unutulized manufacturing capacity so ROE and other ratios will turn highly favourable. Further margin expansion is unlikely.In fact margins may come down depending on management strategy. This is a longterm call because you can never really be sure when the demand spurt will come. But I think the "TIPPING POINT"will be breached within a year and given the underpinnings the PE may expand along with EPS. Edited by Ajith - 17/Sep/2006 at 11:20pm
	Ajith
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Ajith Senior Member Joined: 06/Aug/2006 Location: India Online Status: Offline Posts: 1284	Posted: 05/Oct/2006 at 10:54pm
	News that Titan is venturing into Rayban's mid premium shades category is good for the dominant Rayban as competition will boost the size of the branded sunglasses market which is unnaturally low at around Rs. 200 crores as Titan would have to advertise heavily in this very difficullt(to survive)industry thereby expanding the total pie. However,Rayban may be forced to become agressive to defend its market share if Titan performs well. Edited by Ajith - 05/Oct/2006 at 10:58pm
	Ajith
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basant Admin Group Joined: 01/Jan/2006 Location: India Online Status: Offline Posts: 18403	Posted: 05/Oct/2006 at 11:20pm
	I liked your perspective Titan would have to advertise heavily in this very difficullt(to survive)industry thereby expanding the total pie Yes, generally monopoly markets do expand with the entry of new players. Edited by basant - 05/Oct/2006 at 11:23pm
	'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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India_Bull Senior Member Joined: 19/Sep/2006 Location: United States Online Status: Offline Posts: 2296	Posted: 22/Oct/2006 at 11:10pm
	Hi, Rayban is a premier and must have brand amongst youngsters. Growth of malls and retail industry will help brands like Rayband, VIP Industries,Bata,Archies etc. Basantji, could we have your views on the brands which are likely to scale up or grow up with a correlation to the increase in spend power and consumption patterns?
	India_Bull forever Bull ! www.kapilcomedynights.com
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basant Admin Group Joined: 01/Jan/2006 Location: India Online Status: Offline Posts: 18403	Posted: 22/Oct/2006 at 8:54am
	Rayban is a huge style cum status symbol but what prohibits me from getting invested into this stock is the limited market size for such costly frames. india continues to be a "Big Bazaar" market. How many of us on this forum have bought a Rayban sunglass? Maybe over the next 2-3 years as consumption spends increase we could have Rayban dominating but for anything more to happen Rayban should launch a cheaper variant or else it would have a limited market size. Now at the current levels there is hardly any downside risk and this is a classic value cum growth play. The thing is that growth could still be a few quarters away. Buy this stock with a 2010 vision and investors should be able to do well since by that time our income levels would have increased or Rayban would get more interested in the Indian markets and launch newer and cheaper products.
	'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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surajmnair Newbie Joined: 07/Sep/2006 Online Status: Offline Posts: 20	Posted: 22/Oct/2006 at 10:37am
	Ray ban had a big brand equity even before they came into India.Their Aviator model( Top Gun - Tom Cruise fame) was a big hit all over the world.Rayban's inabilty to bring in new models resulted in the uprising of many brands like police, sting etc in the 90's.Till that time all the sunglasses companies were purely sunglasses companies.But by late 90's leading fashion houses like Gucci, Armaani,D&G also ventured into sunglass business.This really began to crack the market base of rayban , Police and all other excluisve sunglasses companies. What i think the failure of Rayban is - inspite of having a huge brand equity and loyal client base in India, they were unable to tap the markets with their retail endeavours and new models. What we infer form this is, either Rayban should have a rebranding strategy or their is some serious concerns with the management. Psychology of an average Indian sunglss consumer is - why you spend such a huge buck on sunglasses, when the fashion changes every 5 months.Better to stck to low priced '' chinese stuff'' which has got good looks.Indeed true, when your house or apartment which is Reinforced Cement concrete(RCC) gives you a strength of only 50 years, why you want your furnitures to made with teak wood which lasts over 100 years and at the same time the fashion trend in furniture changesevery 3-4 years. If you look closely, in both the issues above said, the consumer spending pattern changed with the coming of sunglasses from china and furniture from Malaysia. Ray ban is not gonna die and holds a premium, but defenitely some rework has to happen.We need to continously monitor the company..... Thanks Borad
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bub100 Senior Member Joined: 08/Sep/2006 Online Status: Offline Posts: 110	Posted: 23/Oct/2006 at 8:01pm
	rayban had good future no doubt but first they will go for buyback than go for expansion as most of the MNC do to get most of the benefit - losser is the shareholder who had no faith in the company. thanks
	gs
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