Stock below Rs 10: This low PE, high ROE company has acquired 30 per cent stake in a retail chain store franchise; do you own it?

This is another giant leap for the company on the path of engraving a strong foot-hold in the consumer products retail market segment

As a measure of forward integration and in order to extend its retail footprint across India, Vikas Lifecare has acquired 30 per cent stake in the Ardh Sainik Canteens in an all-cash deal of Rs 15 crore from its existing stakeholders. This is another giant leap for the company on the path of engraving a strong foot-hold in the consumer products retail market segment.

The company has been eyeing a space for itself in the retail market segment including e-commerce market place for the consumer products including the agro-products business segment expanding exponentially during the recent 12~18 months. Being a strategic investment, Vikas Lifecare plans to commit itself for expansion and broad-basing of Ardh Sainik Canteens business operations. 

Ardh Sainik Canteen Stores (ASC) is a unique concept for chain of retail stores, owned by Abhhyam Services Private Limited, wherein canteen (retail) stores are being operated/opened across India by the retired paramilitary personnel/family members of existing jawans at their hometowns. The present network of ASC comprises: 600 running canteens, 12 running depots and 140 plus vendor partners. 

Vikas Lifecare Limited is principally engaged in the business of manufacturing and trading plastic, polymer and chemicals and plastic products. Further, as a long-term business strategy, the company most recently started diversifying its business interests beyond raw materials (B2B businesses) and forayed into the B2C segment with a host of consumer products for FMCG, agro and infrastructure segments.  

The company has an impressive ROCE and ROE of 25.39 per cent and 21.05 per cent, respectively. 

On Monday, shares of Vikas Lifecare rallied 4.04 per cent to record an intra-day high of Rs 5.15 per share on NSE, despite a weak market sentiment. The scrip closed the session with gains of 1.01 per cent at Rs 5 per share. The stock currently trades at a TTM PE of 22.52.