Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Pantaloon Retail (India) Ltd.
P ositive catalysts ahead [EXTRACT]
Positive underlying business due to growth of modern retail sector
We believe the underlying growth in the modern retail sector, which Pantaloon
Retail (India) (PRIL) management expects to grow to US$20-25bn in the next
seven to eight years, will remain a key positive for the company.
ROE improvement post divestment
ROE has declined steadily from FY04-05 levels. We do not see a reversal of
returns to earlier levels until divestment of all non-core businesses is complete. We
believe ROEs of the pure retail business will be in the range of 15-18%.
Catalysts ahead
Management has guided for near-term divestment of Future Capital Holdings
(FCH), which we believe will be a positive catalyst for the share price. We think
the impact of the high level of debt on the company’s books and the perception of
poor corporate governance have been factored into the share price. On 30 June
2011, the core retail debt/equity ratio was 1.12x. We view FDI in the retail sector
as another catalyst—PRIL is the largest retailer in India and is a key beneficiary of
the change permitting foreign investment in the sector.
Valuation: maintain Buy rating and Rs400.00 price target
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a WACC of
12%.
Pantaloon Retail (India) Ltd.
Pantaloon is India's largest listed retailer. It is rapidly building retail capacity in
its two main retailing formats: lifestyle and value retailing. In the lifestyle
segment, its Pantaloon stores and the upcoming Central stores offer apparel and
fashion items targeting the middle-income market. Its Big Bazaar discount
stores target the price-conscious apparel and grocery markets (the latter through
the Food Discount brand).
Statement of Risk
The retail sector is currently closed to foreign competition, but this could change.
The entry of large format foreign retailers with skills in merchandising and
supply chain management could affect the sales and margins of Indian
companies such as Pantaloon, in our view.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Pantaloon Retail (India) Ltd.
P ositive catalysts ahead [EXTRACT]
Positive underlying business due to growth of modern retail sector
We believe the underlying growth in the modern retail sector, which Pantaloon
Retail (India) (PRIL) management expects to grow to US$20-25bn in the next
seven to eight years, will remain a key positive for the company.
ROE improvement post divestment
ROE has declined steadily from FY04-05 levels. We do not see a reversal of
returns to earlier levels until divestment of all non-core businesses is complete. We
believe ROEs of the pure retail business will be in the range of 15-18%.
Catalysts ahead
Management has guided for near-term divestment of Future Capital Holdings
(FCH), which we believe will be a positive catalyst for the share price. We think
the impact of the high level of debt on the company’s books and the perception of
poor corporate governance have been factored into the share price. On 30 June
2011, the core retail debt/equity ratio was 1.12x. We view FDI in the retail sector
as another catalyst—PRIL is the largest retailer in India and is a key beneficiary of
the change permitting foreign investment in the sector.
Valuation: maintain Buy rating and Rs400.00 price target
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a WACC of
12%.
Pantaloon Retail (India) Ltd.
Pantaloon is India's largest listed retailer. It is rapidly building retail capacity in
its two main retailing formats: lifestyle and value retailing. In the lifestyle
segment, its Pantaloon stores and the upcoming Central stores offer apparel and
fashion items targeting the middle-income market. Its Big Bazaar discount
stores target the price-conscious apparel and grocery markets (the latter through
the Food Discount brand).
Statement of Risk
The retail sector is currently closed to foreign competition, but this could change.
The entry of large format foreign retailers with skills in merchandising and
supply chain management could affect the sales and margins of Indian
companies such as Pantaloon, in our view.
No comments:
Post a Comment