Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D e b t a n d i n v e n t o r y l e v e l s : A c a u s e f o r c o n c e r n…
In our recent meeting with Pantaloon Retail (India) Ltd (PRIL), the
management reiterated its plans to add 2–2.5 million sq ft of retail space
each year. PRIL continues to design various strategies to gain more share
of the consumer’s wallet. PRIL’s Q4FY11 numbers were also in line with
our estimates. The EBITDA margin above 9% (Q4FY11) was a positive
surprise. While the company’s leadership position in the domestic retail
market gives it the competitive edge, we remain concerned about the
rising debt and inventory levels. In this update, we introduce our FY13E
estimates with EPS of | 14.5. We have factored in space addition of 2.3
and 2.4 million sq ft during FY12E and FY13E, respectively.
ƒ Space expansion + same stores sales growth Æ topline growth
We expect the company to add 2.3 and 2.4 million sq ft of space in
FY12E and FY13E, respectively, taking the total operational space to
19.9 million sq ft (15.2 million sq ft – FY11). The management is
confident of maintaining an average same store sales growth of
~15%, which will also aid topline growth, going forward.
ƒ Operating margin to be maintained in the range of 8–9%
PRIL had recently taken a price hike (April 2011) to offset the impact
of increased raw material prices. In Q4FY11, PRIL reported one of its
highest operating margins in the last six quarters. With increasing
share of foods in the business mix, we expect the company to
maintain its EBITDA margin in the range of 8–9%.
ƒ Monetisation of non-core assets to aid in bringing down debt
PRIL plans to monetise its non-core assets (non-retail) over the next
12–18 months and lower the debt burden. We believe this will act as
a strong positive for the company as currently ~44% of the
operating profit gets eaten away in the form of interest costs.
V a l u a t i o n
We remain cautiously positive about the company’s future prospects
considering the space addition plans and also bearing in mind the
company’s plan to tackle high debt and inventory. We have valued the
stock at 0.6x EV/sales (on FY13E sales of | 16,568 crore) to arrive at our
target price of | 266. We have a BUY rating on Pantaloon Retail.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D e b t a n d i n v e n t o r y l e v e l s : A c a u s e f o r c o n c e r n…
In our recent meeting with Pantaloon Retail (India) Ltd (PRIL), the
management reiterated its plans to add 2–2.5 million sq ft of retail space
each year. PRIL continues to design various strategies to gain more share
of the consumer’s wallet. PRIL’s Q4FY11 numbers were also in line with
our estimates. The EBITDA margin above 9% (Q4FY11) was a positive
surprise. While the company’s leadership position in the domestic retail
market gives it the competitive edge, we remain concerned about the
rising debt and inventory levels. In this update, we introduce our FY13E
estimates with EPS of | 14.5. We have factored in space addition of 2.3
and 2.4 million sq ft during FY12E and FY13E, respectively.
ƒ Space expansion + same stores sales growth Æ topline growth
We expect the company to add 2.3 and 2.4 million sq ft of space in
FY12E and FY13E, respectively, taking the total operational space to
19.9 million sq ft (15.2 million sq ft – FY11). The management is
confident of maintaining an average same store sales growth of
~15%, which will also aid topline growth, going forward.
ƒ Operating margin to be maintained in the range of 8–9%
PRIL had recently taken a price hike (April 2011) to offset the impact
of increased raw material prices. In Q4FY11, PRIL reported one of its
highest operating margins in the last six quarters. With increasing
share of foods in the business mix, we expect the company to
maintain its EBITDA margin in the range of 8–9%.
ƒ Monetisation of non-core assets to aid in bringing down debt
PRIL plans to monetise its non-core assets (non-retail) over the next
12–18 months and lower the debt burden. We believe this will act as
a strong positive for the company as currently ~44% of the
operating profit gets eaten away in the form of interest costs.
V a l u a t i o n
We remain cautiously positive about the company’s future prospects
considering the space addition plans and also bearing in mind the
company’s plan to tackle high debt and inventory. We have valued the
stock at 0.6x EV/sales (on FY13E sales of | 16,568 crore) to arrive at our
target price of | 266. We have a BUY rating on Pantaloon Retail.
No comments:
Post a Comment