cafeconomics

Google Search and products like Google Maps, Google Play and You Tube have become an integral part of our lives. Not a day passes by without using Google Search or Maps or You Tube and perhaps no other product or service has captured popular imagination as much as Google has in the last couple of decades. No wonder that Google attracts so much of regulatory attention. This article provides a description of Google's revenue mix and metrics. (of course,with some help from Google search!! and MS Excel not Google Sheets!) In August 2015, Google has re-organized itself into a holding company called Alphabet with two subsidiaries – 1) Google includes main products such as ads, Android, Chrome, hardware, Google Cloud, Google Maps, Google Play, Search, and YouTube, 2) Other Bets include Access, Calico, Capital G, GV, Verily, Waymo, and X, among others. (Annual Report 2019) To put things in perspective, Google accounted for 31.1% of global digital ad spending or $ 103.73 billion at the begi...

Avenue Supermarts has grown at CAGR of more than 25% in the last five years and its market cap crossed Rs 1.5 trillion mark in Feb 2020. The current market price is at Rs2492.10, trading at 124.1 times of earnings against an industry average of 97.18 times PE (moneycontrol.com). The stock overtook NTPC, Indian Oil Corporation (IOCL), Coal India, UltraTech Cement and HDFC Life Insurance Company in the past five weeks to stand at number 20th position in the overall market capitalisation ranking. (Business Standard, Feb 2020) Avenue Supermarts has all the attention of the stock market participants and a discounted flow valuation has been presented below. The promoter shareholding is around 80% and as per SEBI norms they need to shed another 5.21% before the end of the current financial year. Assuming that the QIP and proposed OFS fetches a total of Rs8000 crores in the current year, the DCF valuation gives a value of Rs 1997.15 per share. The assumptions used in this model are describe...

Avenue Supermarts Ltd (D-Mart) continues to outperform quarter after quarter and year after year. In the most recent quarter ended on Dec 2019, it has registered revenues of Rs. 68,069.30 millions, growth rates of 24.38% and 13.66% when compared to revenues of Dec 2018 and Sep 2019 respectively. In the last three quarters, net profit margins have been hovering around the 5.5% mark, notwithstanding the growth in revenues, as shown in the figure below. In the last five years, revenues have grown at an impressive CAGR of 25.45% and gross margins have been consistently maintained at 14 to 15%. In the current financial year 2019-20, 20 stores have been added and the total number of stores is 196 as of Dec 2019 as reported in D-Mart investor presentation. Notwithstanding, the rise in the number of stores, revenue per square feet has been increasing year after year as shown in the figure below. (D-Mart Investor Presentation Jan 2020) Key Financial Ratios of Avenue Supermarts Profitability Rat...

In a recent address at the National Retail Federation in New York, Microsoft CEO Satya Nadella remarked that by capturing the commercial intent and buying behaviour of consumers, retail industry is going to set the tone for not just for consumer experience but also the global economy in the coming decade. https://www.youtube.com/watch?v=vkSNW6CJN7Q&t=835s As of FY end 2018-19 India's private consumption expenditure stood at $1.6 trillions which is 60% of India's GDP. Retail industry accounts for $857 billions out of the total private consumption expenditure. (Reference: D-Mart Investor's Presentation/Crisil Report Jan 2020/CEIC Data) Effectively, retail industry accounts for 25 to 30 % of India's GDP. Not just India, for most major economies retail industry accounts for a significant share of GDP. Driven by technology and modernisation, the retail sector in India is at the cusp of evolution. Disruptions throughout the value chain – sourcing, manufacturing, ...

This is a descriptive article based on the data set provided Prof. Damodaran on this website http://pages.stern.nyu.edu/~adamodar/ . The objective is to provide a reference point for cost of equity for Indian companies specially for retail investors. It is already known that cost of equity (using CAPM model) becomes a critical input to evaluate risk from an equity investor stand point of view in corporate finance and valuation. Given below is the link to the spreadsheet containing the cost of equity for Indian companies by sector.   https://drive.google.com/open?id=1pSH_ElsNh_psnwHn3N9wwbiwsbPjCXwn The rest of this article is devoted to describing some of the trends in cost of equity for Indian companies. For the market as a whole there is not much of a difference in terms of cost of equity between 2019 and 2020. The overall cost of equity for the market as a whole as of Jan 2020 is 10.16%  as against 10.21% of 2019. Advertising, electronics, oil/gas and dining industry are am...

It is high time for all governments - state and center, to consider implementing one child policy. Patriotism does not mean hoisting flags and singing national anthem - all citizens need to show their commitment by participating in nation building. The idea here is to not blame any one section or political party or anyone else. As a nation, we have inherited a number of problems - population explosion is at the center - and it requires a collective and sustained effort to solve these problems. 1. Quality of living: When there is a large population and scramble for resources the quality of living goes for a toss. In terms of UN Human Development Index, we are faring very bad and the signs of improvement are limited. Unless, we address population explosion it is next to impossible to provide a good quality of life for all citizens. 2. Mismatch between jobs creation and requirements: While the number of graduates aspiring for jobs is increasing every year the number of jobs created is ...

When we are hotly contesting citizenship, immigration, infiltration etc why not address the elephant in the room? Today clearly we have a situation where resources (or mobilisation of resources) are falling short of meeting the needs of an over growing and out of control population. If we cannot provide good life to our future generations then we do not have any right to bring them into this world. So at the risk of irking people's sentiments why don't we implement one child policy ? At least for two or three decades, till the time we completely eliminate poverty and provide good life to existing population. Those who want a second child can go for adoption wherever possible. In terms of human development index and quality of living, we have a long way to go. It is possible to provide good quality of living only when population is under control.