The Hindu Business Line : Archies up on retail card

IS Archies the next big story on the unfolding retail canvas? Taking a cue from the company's reinvented business strategy and growth plan, a section of investors are evincing fresh interest at the Archies stock.

The counter on Tuesday buzzed with activity as Archies' price moved up around 6 per cent on major bourses. On the BSE, it logged a traded quantity of 2.55 lakh shares and on the NSE 4.40 lakh shares.

According to a fund manager, the company has fine-tuned its business strategy by migrating to gifts from a greetings cards-alone business model. But more importantly, it is expanding its retail speciality outlets.

Smitten by proliferation of free e-mails, the company has diversified into gifts for all age groups and appealing to the upwardly mobile middle class customers. It has also reduced its dependence on the cards business.

The company plans to add 50 more owned-and-managed gifts and card shops to its 50 exclusive outlets in the country during this fiscal.

By virtue of its agreements with Walt Disney (in April 2004 for 28 months) and Simon Elvin for marketing their products, Archies has added an edge to its own brands. The company has designing and marketing collaborations with American Greetings Corporation and Gibson Greetings Inc for cards too.

"The larger product profile in sync with the spread of urban culture and GDP growth, coupled with changing shopping habits, makes its exclusive and almost personalised artefacts retailing model a compelling one. Along with the prospect of incremental growth in turnover including exports, this virtually debt-free company holds out a promise for higher P/E multiple," said an analyst with an institutional brokerage.

At Tuesday's closing price of Rs 87.65, the stock traded at around 10 times its trailing twelve months EPS of Rs 8.7, Mr Darshan Mankad of Anagram Stockbroking pointed out. But other stocks active in the retail space have been fetching rich P/E multiples of over 40. Interestingly, the book value of Archies is Rs 78.

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