For scale of opportunity are you basically looking at Market cap eg of Pantaloon USD 1 billion and comparing this to annual retail sector sales of USD 300 Billion ?ABSOLUTELY. LOOK AT TITAN JEWELLERYSALE OF RS 2000 CRORES AND SIZE OF MARKET OPPORTUNITY IS RS 40,000 CRORES.SO TITAN EXCEPT FOR NEAR TERM VALUATIONS IS A GREAT PLAY I WOULD THINK. [/QUOTE] .
Basantjee,
Above you have mentioned Titan Jewellery sales of Rs. 2000 crores and market opportunity (Jewellery sector annual sales) Rs. 40000 crs.
As you normally compare Company Market cap to Market opportunity (to determine scale of opportunity for a company), of hand would you know the market cap of Titan ? to compare it to market opportunity of Rs. 40000 crs.
Also when one compares a company's Market cap to Market opportunity (annual sales of that sector) this is done not only to get an idea of the opportunity but also because growth stocks normally quote at some multiple of market cap/sales of the company, thus currently if a company may trade eg 7 times market cap/sales, on the face of it may look expensive but actually it could be a great buy bacause given the Market opportunity and with company sales increasing year on year so will the market cap of the company and thus the stock price.
TRUE AND IF PANTALOON DOES A SALE OF RS 4000 CRORE THIS YEAR AND RELIANCE DOES 10 TIMES THAT IT DOES NOT MAKE A DIFFERENCE.
Above statement, it is because the scale of opportunity is so large that many players will not only survive but also make good money.
Your views ?
Rgds.
Edited by Equity Buff - 08/Oct/2006 at 8:41am
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