Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Retail
Revenue growth to be aided by space addition as SSSG slows down
Our retail coverage universe is expected to report a YoY topline growth
of 22.7% during Q3FY12E. Considering the overall slowdown in
consumption owing to inflationary pressure and rising interest rates
(which bring down the real disposable income), we believe that a large
part of this growth will come through space additions carried out during
the quarter. Same store sales growth (SSSG – revenue growth of stores
in existence for over a year) for all players is likely to be muted despite it
being the festive quarter. While sales for all retailers were good in the
month of October (due to Dussera & Diwali), sales for the months of
November and December were below expectations. Infact, retailers
have also witnessed a YoY dip in November and December sales
(barring northern regions where sales of winter wear was the saving
grace).
Operating margins to remain subdued
Despite it being a festive quarter where lesser promotional offers are
running, one cannot expect a positive surprise on the operating margin
front as lower SSSG and higher operating expenses due to space
addition will eat into the operating efficiency of the retailers. The
operating performance in the quarter under review is likely to remain
subdued as newer stores will take time to stabilize.
We expect Pantaloon Retail to maintain its EBITDA margin at 8.7%. On
the other hand, Shoppers Stop’s operating margin is likely to dip from
6.7% in Q3FY11 to 5.1% in Q3FY12E due to ongoing losses of
HyperCity. Apparel sales for the company were also very weak (barring
October). For Titan Industries, we expect a marginal dip in the operating
margin to 9.6% (down by 40 bps) as the depreciating rupee will impact
input prices (imported watch components). However, the company has
taken a price hike in the range of 4 – 20% across brands to mitigate the
impact of the same.
Space addition plans remain intact
Despite the slowdown in demand, retailers have continued with their
space addition plans. Shoppers Stop, considering its healthy balance
sheet will be in a comfortable position to continue their space addition
plans. However, due to higher leverage Pantaloon Retail will be forced
to curtail their plans if the situation worsens further. During Q3FY12E we
expect Shoppers Stop to add 0.2 million sq. ft. taking their total
operational space to 4.1 million sq. ft. Similarly, Pantaloon Retail is likely
to increase its total operational retail space from 15.7 million sq. ft. to
16.2 million sq. ft as on December 2011. Revenue per sq ft is likely to
remain flat as newer stores will take time to stabilise. For Pantaloon
Retail, revenue per sq. ft. is likely to dip 2.5% YoY to | 1,898, while that
for Shoppers Stop is expected to dip 5.0% YoY from | 2,415 in Q3FY11
to | 2,294.
Company specific view
Company Remarks
Pantaloon
Retail
PRIL's Q2FY12 revenues are expected to increase by 14.9% YoY to | 3,170.0 crore led
by 0.5 mn sq ft addition during the quarter. However, we expect a lower revenue per sq
ft of | 1,898 (down 2.5% YoY). We expect EBITDA margin to be maintained at 8.7%.
Higher interest outlay (~45% of EBITDA) is likely to weigh on the PAT and lead to a PAT
de-growth of 6.3% (| 44.3 crore).
Shoppers
Stop
We expect a 39.3% YoY (| 890.9 crore) increase in sales led by addition of 0.2 million
sq. ft. of space taking the total operational space to 4.1 million sq. ft. We expect revenue
per sq. ft. to dip from | 2,415 in Q3FY11 to | 2,294 in Q3FY12. EBITDA margin is likely
to dip from 6.7% in Q3FY11 to 5.1% in Q3FY12 due to losses of Hyper city.
Titan
Industries
Titan's Q3FY12E revenues are expected to increase by 28.4% YoY to | 2,509.5 crore led
by growth in both jewellery (30%) and watches (39%) segment. Launches on premium
watches and price hike taken during the quarter will aid the watches segment growth.
We expect EBITDA margin to slip marginally from 10.0% in Q3FY11 to 9.6% in Q3FY12.
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Retail
Revenue growth to be aided by space addition as SSSG slows down
Our retail coverage universe is expected to report a YoY topline growth
of 22.7% during Q3FY12E. Considering the overall slowdown in
consumption owing to inflationary pressure and rising interest rates
(which bring down the real disposable income), we believe that a large
part of this growth will come through space additions carried out during
the quarter. Same store sales growth (SSSG – revenue growth of stores
in existence for over a year) for all players is likely to be muted despite it
being the festive quarter. While sales for all retailers were good in the
month of October (due to Dussera & Diwali), sales for the months of
November and December were below expectations. Infact, retailers
have also witnessed a YoY dip in November and December sales
(barring northern regions where sales of winter wear was the saving
grace).
Operating margins to remain subdued
Despite it being a festive quarter where lesser promotional offers are
running, one cannot expect a positive surprise on the operating margin
front as lower SSSG and higher operating expenses due to space
addition will eat into the operating efficiency of the retailers. The
operating performance in the quarter under review is likely to remain
subdued as newer stores will take time to stabilize.
We expect Pantaloon Retail to maintain its EBITDA margin at 8.7%. On
the other hand, Shoppers Stop’s operating margin is likely to dip from
6.7% in Q3FY11 to 5.1% in Q3FY12E due to ongoing losses of
HyperCity. Apparel sales for the company were also very weak (barring
October). For Titan Industries, we expect a marginal dip in the operating
margin to 9.6% (down by 40 bps) as the depreciating rupee will impact
input prices (imported watch components). However, the company has
taken a price hike in the range of 4 – 20% across brands to mitigate the
impact of the same.
Space addition plans remain intact
Despite the slowdown in demand, retailers have continued with their
space addition plans. Shoppers Stop, considering its healthy balance
sheet will be in a comfortable position to continue their space addition
plans. However, due to higher leverage Pantaloon Retail will be forced
to curtail their plans if the situation worsens further. During Q3FY12E we
expect Shoppers Stop to add 0.2 million sq. ft. taking their total
operational space to 4.1 million sq. ft. Similarly, Pantaloon Retail is likely
to increase its total operational retail space from 15.7 million sq. ft. to
16.2 million sq. ft as on December 2011. Revenue per sq ft is likely to
remain flat as newer stores will take time to stabilise. For Pantaloon
Retail, revenue per sq. ft. is likely to dip 2.5% YoY to | 1,898, while that
for Shoppers Stop is expected to dip 5.0% YoY from | 2,415 in Q3FY11
to | 2,294.
Company specific view
Company Remarks
Pantaloon
Retail
PRIL's Q2FY12 revenues are expected to increase by 14.9% YoY to | 3,170.0 crore led
by 0.5 mn sq ft addition during the quarter. However, we expect a lower revenue per sq
ft of | 1,898 (down 2.5% YoY). We expect EBITDA margin to be maintained at 8.7%.
Higher interest outlay (~45% of EBITDA) is likely to weigh on the PAT and lead to a PAT
de-growth of 6.3% (| 44.3 crore).
Shoppers
Stop
We expect a 39.3% YoY (| 890.9 crore) increase in sales led by addition of 0.2 million
sq. ft. of space taking the total operational space to 4.1 million sq. ft. We expect revenue
per sq. ft. to dip from | 2,415 in Q3FY11 to | 2,294 in Q3FY12. EBITDA margin is likely
to dip from 6.7% in Q3FY11 to 5.1% in Q3FY12 due to losses of Hyper city.
Titan
Industries
Titan's Q3FY12E revenues are expected to increase by 28.4% YoY to | 2,509.5 crore led
by growth in both jewellery (30%) and watches (39%) segment. Launches on premium
watches and price hike taken during the quarter will aid the watches segment growth.
We expect EBITDA margin to slip marginally from 10.0% in Q3FY11 to 9.6% in Q3FY12.
Source: Company, ICICIdirect.com Research
No comments:
Post a Comment