Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
What’s making news?
FDI in retail – noise continues but no action
There was attention focused on the FDI issue during the Davos forum
The CEOs of Tesco and Walmart reportedly met the Commerce Minister to discuss the issue
The DIPP Secretary and Commerce Minister in different statements urged foreign retailers to invest in back end
infrastructure and integrate with small retailers
Landmark group expanding the SPAR hypermarket format (Sify)
SPAR has opened its first outlet in North India with a 74,000 sq ft store at Delhi
Before this, SPAR was present in Bangalore, Hyderabad and Mangalore; it plans to add Gurgaon and Pune soon
The company plans to open 24 hypermarkets over the next two years at an investment of Rs5.5bn
Spencer’s targets 20-25 new hypermarkets by end FY12 (IndiaRetailing)
Spencer’s plans to add 600k sq ft by March 2012 with an investment of Rs1bn
This will mainly come from large format hypermarket stores of ~20k sq ft each besides some neighborhood stores
Besides strengthening its presence in existing cities, the company plans to enter Bihar, Jharkand and the north eastern
states
Kerela based retailer Varkey’s in distress (TOI)
Varkey’s is reportedly looking for an emergency fund infusion to stay afloat
The company currently has 59 stores across Kerala and had a turnover of Rs1.6bn in FY10
The company is facing a liquidity crunch following four years of aggressive expansion
Starbucks enters strategic alliance with Tata Coffee (BS)
The alliance will initially focus on sourcing as well as setting up Starbucks outlets
The first outlet is expected to open within six-seven months
There is reportedly no exclusive agreement as yet
Joyalukkas and TBZ file for IPOs (VCCircle)
Joyallukas and Tribhovandas Bhimji Zaveri (TBZ), two domestic jewellery retailers, have filed their DRHPs with SEBI for
IPOs planned for later in the year
Joyallukas is based in southern India and currently has 21 stores with FY10 revenues of Rs18.2bn. It plans to raise over
Rs5bn through the IPO
TBZ is western India based and currently has 14 stores with plans to open another 44 by FY14. It FY10 revenues of
Rs8.9bn in FY10.
Sreeleathers plans 100 stores (ET)
Sreeleathers is and eastern India based value-for-money shoe retailer with 35 stores nationwide
The company plans to add another 100 stores over two years and widen its geographic footprint
The in-store price points range between Rs100-Rs799
Archies enters into franchise agreement with Hallmark (ET)
Archies, which is India’s top greeting cards maker, has tied up with Hallmark Cards to open exclusive stores for the
international brand
The company plans to open 20 such stores in NCR and Mumbai in the first year with a plan to expand to 100 in 5 years
The merchandise will be manufactured domestically under license
Rentals hardened in 2010
Retail rentals
2010 seems to have been a year of recovery in rentals for
most markets
QoQ trends are also positive, albeit in select markets,
suggesting some more hardening in 2011
NCR and Mumbai remain the most expensive retail
destinations
Khan Market in Delhi has the highest rentals in India,
followed by Linking Road in Mumbai and Connaught Place
(also in Delhi)
Results round-up
Inflation beginning to bite
Net sales growth
3QFY11 saw retailers registering robust YoY growth in net
sales, led by strong same store sales performance, helped
by a delayed festive season
Titan sales grew 43% YoY in 3QFY11, led by jewellery but
with a positive growth surprise in watches
Shopper’s Stop grew 21% (22% same store growth) and
Trent grew 27% in 2QFY11
Jubilant Foods, registered 58% revenue growth (36%
same store growth) with a net turnover of Rs1.86bn
Pantaloon revenue growth was strong at 31% with same
store growth of 12% in value, 21% in lifestyle and 18% in
home formats
Gross margin
3QFY11 saw gross margin decline year on year for all
major retailers except Titan as inflationary pressures
began to bite
Garment retailers in particular have been flagging of price
hikes ahead to offset the rise in cotton prices
Margin performance mixed
Ebitda margin
Unlike H1, 3Q saw a more retailers see margin declines
than had margin gains
Trent and Shoppers Stop saw Ebitda margins decline.
Shoppers’ margin performance was dampened by a one-off
gain in the base quarter
Pantaloon saw Ebitda margins contract despite robust
same store sales growth due to gross margin declines
Titan and Jubilant Foods saw the benefits of operating
leverage help improve margins
Net margin
Net margin trends mirrored Ebitda margins with the
exception of Trent, which had significant non-operating
income
Titan posted the strongest growth in net margin growing
from 5.7% to 7% in 3QFY11
Jubilant’s performance wasn’t as impressive as earlier
quarters and margins were actually down QoQ
Company
updates
Titan Industries- TTAN IN (O-PF)
Business description:
Titan is India's largest manufacturer /retailer of watches (21% FY10
sales) and jewellery (63% FY10 sales)
In the watches segment Titan sells high, mid as well as low end
watches
In jewellery, Tanishq is Titan’s luxury jewellery retail format and
GoldPlus is its new mass market offering
Goldplus (mass market jewellery) portfolio now stable at 29 stores
with no major store additions planned
Eye+ (prescriptive eye-wear) formats are being scaled-up and is now
present in over 40 cities
Precision engineering division is expected to break-even in 2HFY11
Growth drivers
Titan added 52 new stores in FY10 across its watches, jewellery and
eyewear segments. As of 30 Sep 2010, Titan has over 592 stores
spread over 0.7m sf
‘World of Titan’ stores: 303
Tanishq stores: 117
Eye+ stores: 102
To supplement growth, Titan has commission additional production
facility in Uttarakhand, India with an additional capacity of 5m
watches per year
Titan close to 5 year average PE
News and updates
The company plans to add another 100 World of Titan
stores over the next three years, taking the total to 400
stores
The company aims to set up 300-400 eyewear stores in
the next three years
Titan benefited from strong wedding demand and a
delayed festive season in 3Q
Pantaloon Retail- PF IN (O-PF)
Business description:
Pantaloon is India’s largest retailer and a part of Future group.
Its retail business can be grouped into 3 categories:
Lifestyle retailing: Pantaloon and Central
Value retail: Big Bazaar, Food Bazaar and KB’s fair price
Home retail: Home Town and E-Zone
Non retail businesses of Future group
Post-restructuring, PRIL will be a pure play retail company
Asset management: Real estate and private equity funds
Consumer finance, hotels and logistics
General and life insurance
The restructuring of the financial holdings has run into
regulatory hurdles
PRIL has crossed 13m sf in retail space
News and updates
Big Bazaar has been appointed as authorised dealer for World
Cup 2011 merchandise
Pantaloon is now planning to hive off eZone into a separate
subsidiary ahead of investments by a new partner
The company also plans to push the online channel for eZone in
an effort to counter challenges in traditional electronic retailing
Future Group planning to open a 100 acre food park near
Bangalore to improve its sourcing of food products
Pantaloon also plans to open 50 wholesale stores in rural areas
over four years
Shopper’s Stop- SHOP IN (U-PF)
Business description:
Shopper’s Stop operates India’s largest chain of department
stores under the Shopper’s Stop brand
It also has 5 specialty retail formats
Crossword: Books, gifts and music
Mothercare: Mother and baby care
MAC: Cosmetics, Arcelia
Home Stop: Home furnishings
Hypercity: Food, grocery and general merchandize
It has increased its stake in Hypercity and now owns 51%
Current retail space: 2.23m sf across over 100 stores and
another 0.83m sf in Hypercity (7 stores)
News and updates
Valuation below long term average but still high
Price: Rs342
Mkt Cap: US$617m
Avg T/O: US$1.5m
Shoppers Stop plans to have 4mn square feet of
retail space by the end of FY14, virtually doubling
over the 2.04mn sq ft at the end of FY10
Hypercity is focusing on quality of merchandise
rather than price alone as a footfall driver
Hypercity will add nearly 0.25m square feet by
October across new stores in Ludhiana, Bangalore,
Ahmerdabad and Pune
Trent- TRENT IN (NR)
Business description:
Trent is one of India’s leading retailers and is a part of
the Tata group
It operates through 3 verticals over 77 stores
Westside (Department stores): 43 in 29 cities
Star Bazaar (Hypermarket stores): 10
Landmark (Books and gifts stores): 27
Fashion Yatra
It has two JVs –one with Inditex, to open Zara stores,
and another with Tesco, to open cash and carry stores
and also to be the supply chain and logistics partner
to Star India Bazaar
Annual report highlights
As of FY10, Trent’s floor space was at c.1.78m sf
We expect it to hit 3m sf of floor space by FY13
The management intends to scale up to 50 Star
Bazaar (Hypermarket stores) over the next three
years
The company will focus on increasing the private label
mix within Star Bazaar
The company expects store additions in FY11 to be
similar to what was seen in FY10
News and updates
Trent plans to double the number of Star Bazaar outlets
to 20 in 2011
Trent is planning to expand the Westside format in tier II
and III cities
Trent is reportedly exploring the franchisee route for
expanding its Landmark format
Landmark has started dealing in pre-owned games as
part of its effort to increase focus on non-book categories
Reliance Retail- Unlisted
Business description:
Reliance Retail is 91.1% subsidiary of Reliance Industries
Ltd.
It operates over 1,000 stores across 85 cities across 14
states
Other formats: Mart, Super, Digital, Trendz, Footprint,
Wellness, iStore, Footprint, Jewellery, TimeOut,
bookstore, AutoZone
Currently there are c.5.5m ‘RelianceOne’ members under
its flagship loyalty programme
News and updates
Reliance will come up with 3000-4000 new stores over
the next 3-4 years across all 19 of its formats
The company plans to increase the number of Reliance
Trends stores to 150 by Mar’12 from 36 currently
The company plans to open 150 stores across formats
in the last quarter of FY11
Reliance Footprint has reportedly achieved break even
and is targeting Rs20bn of revenues in five years
Bharti Wal-Mart- Unlisted
Business description:
Wal-Mart and Bharti Enterprises formed a 50:50 JV to foray
into the wholesale cash and carry business under Bharti
Wal-Mart Private Limited
In addition, Bharti has also opened retail stores, the supply
chain for which is supported by Bharti Wal-Mart
Currently, Bharti has a total of 117 stores, including Easy
Day stores and Easy Day Market stores, in Punjab,
Haryana, UP, Rajasthan, among others.
Bharti plans to increase its store portfolio to about 140
stores by the year end; Bharti Wal-Mart has recently
opened its third cash and carry store
The company plans to open 15 wholesale cash and carry
stores by the end of CY 2011
Details of Bharti Enterprise’s retail venture
News and updates
Bharti Wal-Mart is keen to enter eastern India but feels that
the West Bengal government is “not enthusiastic” about this
and is now considering other states
The company recently opened its first store easyday market in
Gurgaon. This marks the company’s entry in the national
capital region and also its first entry into a metropolitan city
Bharti Walmart has become the first Indian retailer to offer
customers the facility to pay in-store bills through a mobile
wallet service
Aditya Birla Retail- Unlisted
Business description:
In January 2007, Aditya Birla group announced plans
to enter the retail sector with the acquisition of south
India based Trinethra Super Retail
Trinethra group operated 170 stores across 0.5m sf
retailing food and grocery in Andhra Pradesh, Kerala,
Karnataka and Tamil Nadu
Retail franchise:
Currently: 540 More supermarket store and nine
hypermarket stores totalling 1.7mn sq ft
Store size: Super markets average 2,500-3000 sf
and hypermarket stores 55,000 sf
Expansion plans : 100 supermarkets and 8
hypermarkets this year; 14 hypermarkets next
year
ABRLs merchandise mix is 15% fresh food, fruits
& vegetables, 50% grocery food & staples, 25-
30% FMCG and 5-10% general merchandise
Its loyalty program ‘Clubmore’ has 2.6m
customers, of which 0.4m are currently active
News and updates
The company’s growth plans are focused on South
India for supermarkets but pan-India for the
hypermarkets format
The company plans to have 1600 supermarkets and
65 hypermarkets by 2016 with investments of Rs180-
200m/year in hypermarkets and Rs0.4m per year in
supermarkets
The company expect to break even at the PAT level by
FY15 and Ebitda level by FY13
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
What’s making news?
FDI in retail – noise continues but no action
There was attention focused on the FDI issue during the Davos forum
The CEOs of Tesco and Walmart reportedly met the Commerce Minister to discuss the issue
The DIPP Secretary and Commerce Minister in different statements urged foreign retailers to invest in back end
infrastructure and integrate with small retailers
Landmark group expanding the SPAR hypermarket format (Sify)
SPAR has opened its first outlet in North India with a 74,000 sq ft store at Delhi
Before this, SPAR was present in Bangalore, Hyderabad and Mangalore; it plans to add Gurgaon and Pune soon
The company plans to open 24 hypermarkets over the next two years at an investment of Rs5.5bn
Spencer’s targets 20-25 new hypermarkets by end FY12 (IndiaRetailing)
Spencer’s plans to add 600k sq ft by March 2012 with an investment of Rs1bn
This will mainly come from large format hypermarket stores of ~20k sq ft each besides some neighborhood stores
Besides strengthening its presence in existing cities, the company plans to enter Bihar, Jharkand and the north eastern
states
Kerela based retailer Varkey’s in distress (TOI)
Varkey’s is reportedly looking for an emergency fund infusion to stay afloat
The company currently has 59 stores across Kerala and had a turnover of Rs1.6bn in FY10
The company is facing a liquidity crunch following four years of aggressive expansion
Starbucks enters strategic alliance with Tata Coffee (BS)
The alliance will initially focus on sourcing as well as setting up Starbucks outlets
The first outlet is expected to open within six-seven months
There is reportedly no exclusive agreement as yet
Joyalukkas and TBZ file for IPOs (VCCircle)
Joyallukas and Tribhovandas Bhimji Zaveri (TBZ), two domestic jewellery retailers, have filed their DRHPs with SEBI for
IPOs planned for later in the year
Joyallukas is based in southern India and currently has 21 stores with FY10 revenues of Rs18.2bn. It plans to raise over
Rs5bn through the IPO
TBZ is western India based and currently has 14 stores with plans to open another 44 by FY14. It FY10 revenues of
Rs8.9bn in FY10.
Sreeleathers plans 100 stores (ET)
Sreeleathers is and eastern India based value-for-money shoe retailer with 35 stores nationwide
The company plans to add another 100 stores over two years and widen its geographic footprint
The in-store price points range between Rs100-Rs799
Archies enters into franchise agreement with Hallmark (ET)
Archies, which is India’s top greeting cards maker, has tied up with Hallmark Cards to open exclusive stores for the
international brand
The company plans to open 20 such stores in NCR and Mumbai in the first year with a plan to expand to 100 in 5 years
The merchandise will be manufactured domestically under license
Rentals hardened in 2010
Retail rentals
2010 seems to have been a year of recovery in rentals for
most markets
QoQ trends are also positive, albeit in select markets,
suggesting some more hardening in 2011
NCR and Mumbai remain the most expensive retail
destinations
Khan Market in Delhi has the highest rentals in India,
followed by Linking Road in Mumbai and Connaught Place
(also in Delhi)
Results round-up
Inflation beginning to bite
Net sales growth
3QFY11 saw retailers registering robust YoY growth in net
sales, led by strong same store sales performance, helped
by a delayed festive season
Titan sales grew 43% YoY in 3QFY11, led by jewellery but
with a positive growth surprise in watches
Shopper’s Stop grew 21% (22% same store growth) and
Trent grew 27% in 2QFY11
Jubilant Foods, registered 58% revenue growth (36%
same store growth) with a net turnover of Rs1.86bn
Pantaloon revenue growth was strong at 31% with same
store growth of 12% in value, 21% in lifestyle and 18% in
home formats
Gross margin
3QFY11 saw gross margin decline year on year for all
major retailers except Titan as inflationary pressures
began to bite
Garment retailers in particular have been flagging of price
hikes ahead to offset the rise in cotton prices
Margin performance mixed
Ebitda margin
Unlike H1, 3Q saw a more retailers see margin declines
than had margin gains
Trent and Shoppers Stop saw Ebitda margins decline.
Shoppers’ margin performance was dampened by a one-off
gain in the base quarter
Pantaloon saw Ebitda margins contract despite robust
same store sales growth due to gross margin declines
Titan and Jubilant Foods saw the benefits of operating
leverage help improve margins
Net margin
Net margin trends mirrored Ebitda margins with the
exception of Trent, which had significant non-operating
income
Titan posted the strongest growth in net margin growing
from 5.7% to 7% in 3QFY11
Jubilant’s performance wasn’t as impressive as earlier
quarters and margins were actually down QoQ
Company
updates
Titan Industries- TTAN IN (O-PF)
Business description:
Titan is India's largest manufacturer /retailer of watches (21% FY10
sales) and jewellery (63% FY10 sales)
In the watches segment Titan sells high, mid as well as low end
watches
In jewellery, Tanishq is Titan’s luxury jewellery retail format and
GoldPlus is its new mass market offering
Goldplus (mass market jewellery) portfolio now stable at 29 stores
with no major store additions planned
Eye+ (prescriptive eye-wear) formats are being scaled-up and is now
present in over 40 cities
Precision engineering division is expected to break-even in 2HFY11
Growth drivers
Titan added 52 new stores in FY10 across its watches, jewellery and
eyewear segments. As of 30 Sep 2010, Titan has over 592 stores
spread over 0.7m sf
‘World of Titan’ stores: 303
Tanishq stores: 117
Eye+ stores: 102
To supplement growth, Titan has commission additional production
facility in Uttarakhand, India with an additional capacity of 5m
watches per year
Titan close to 5 year average PE
News and updates
The company plans to add another 100 World of Titan
stores over the next three years, taking the total to 400
stores
The company aims to set up 300-400 eyewear stores in
the next three years
Titan benefited from strong wedding demand and a
delayed festive season in 3Q
Pantaloon Retail- PF IN (O-PF)
Business description:
Pantaloon is India’s largest retailer and a part of Future group.
Its retail business can be grouped into 3 categories:
Lifestyle retailing: Pantaloon and Central
Value retail: Big Bazaar, Food Bazaar and KB’s fair price
Home retail: Home Town and E-Zone
Non retail businesses of Future group
Post-restructuring, PRIL will be a pure play retail company
Asset management: Real estate and private equity funds
Consumer finance, hotels and logistics
General and life insurance
The restructuring of the financial holdings has run into
regulatory hurdles
PRIL has crossed 13m sf in retail space
News and updates
Big Bazaar has been appointed as authorised dealer for World
Cup 2011 merchandise
Pantaloon is now planning to hive off eZone into a separate
subsidiary ahead of investments by a new partner
The company also plans to push the online channel for eZone in
an effort to counter challenges in traditional electronic retailing
Future Group planning to open a 100 acre food park near
Bangalore to improve its sourcing of food products
Pantaloon also plans to open 50 wholesale stores in rural areas
over four years
Shopper’s Stop- SHOP IN (U-PF)
Business description:
Shopper’s Stop operates India’s largest chain of department
stores under the Shopper’s Stop brand
It also has 5 specialty retail formats
Crossword: Books, gifts and music
Mothercare: Mother and baby care
MAC: Cosmetics, Arcelia
Home Stop: Home furnishings
Hypercity: Food, grocery and general merchandize
It has increased its stake in Hypercity and now owns 51%
Current retail space: 2.23m sf across over 100 stores and
another 0.83m sf in Hypercity (7 stores)
News and updates
Valuation below long term average but still high
Price: Rs342
Mkt Cap: US$617m
Avg T/O: US$1.5m
Shoppers Stop plans to have 4mn square feet of
retail space by the end of FY14, virtually doubling
over the 2.04mn sq ft at the end of FY10
Hypercity is focusing on quality of merchandise
rather than price alone as a footfall driver
Hypercity will add nearly 0.25m square feet by
October across new stores in Ludhiana, Bangalore,
Ahmerdabad and Pune
Trent- TRENT IN (NR)
Business description:
Trent is one of India’s leading retailers and is a part of
the Tata group
It operates through 3 verticals over 77 stores
Westside (Department stores): 43 in 29 cities
Star Bazaar (Hypermarket stores): 10
Landmark (Books and gifts stores): 27
Fashion Yatra
It has two JVs –one with Inditex, to open Zara stores,
and another with Tesco, to open cash and carry stores
and also to be the supply chain and logistics partner
to Star India Bazaar
Annual report highlights
As of FY10, Trent’s floor space was at c.1.78m sf
We expect it to hit 3m sf of floor space by FY13
The management intends to scale up to 50 Star
Bazaar (Hypermarket stores) over the next three
years
The company will focus on increasing the private label
mix within Star Bazaar
The company expects store additions in FY11 to be
similar to what was seen in FY10
News and updates
Trent plans to double the number of Star Bazaar outlets
to 20 in 2011
Trent is planning to expand the Westside format in tier II
and III cities
Trent is reportedly exploring the franchisee route for
expanding its Landmark format
Landmark has started dealing in pre-owned games as
part of its effort to increase focus on non-book categories
Reliance Retail- Unlisted
Business description:
Reliance Retail is 91.1% subsidiary of Reliance Industries
Ltd.
It operates over 1,000 stores across 85 cities across 14
states
Other formats: Mart, Super, Digital, Trendz, Footprint,
Wellness, iStore, Footprint, Jewellery, TimeOut,
bookstore, AutoZone
Currently there are c.5.5m ‘RelianceOne’ members under
its flagship loyalty programme
News and updates
Reliance will come up with 3000-4000 new stores over
the next 3-4 years across all 19 of its formats
The company plans to increase the number of Reliance
Trends stores to 150 by Mar’12 from 36 currently
The company plans to open 150 stores across formats
in the last quarter of FY11
Reliance Footprint has reportedly achieved break even
and is targeting Rs20bn of revenues in five years
Bharti Wal-Mart- Unlisted
Business description:
Wal-Mart and Bharti Enterprises formed a 50:50 JV to foray
into the wholesale cash and carry business under Bharti
Wal-Mart Private Limited
In addition, Bharti has also opened retail stores, the supply
chain for which is supported by Bharti Wal-Mart
Currently, Bharti has a total of 117 stores, including Easy
Day stores and Easy Day Market stores, in Punjab,
Haryana, UP, Rajasthan, among others.
Bharti plans to increase its store portfolio to about 140
stores by the year end; Bharti Wal-Mart has recently
opened its third cash and carry store
The company plans to open 15 wholesale cash and carry
stores by the end of CY 2011
Details of Bharti Enterprise’s retail venture
News and updates
Bharti Wal-Mart is keen to enter eastern India but feels that
the West Bengal government is “not enthusiastic” about this
and is now considering other states
The company recently opened its first store easyday market in
Gurgaon. This marks the company’s entry in the national
capital region and also its first entry into a metropolitan city
Bharti Walmart has become the first Indian retailer to offer
customers the facility to pay in-store bills through a mobile
wallet service
Aditya Birla Retail- Unlisted
Business description:
In January 2007, Aditya Birla group announced plans
to enter the retail sector with the acquisition of south
India based Trinethra Super Retail
Trinethra group operated 170 stores across 0.5m sf
retailing food and grocery in Andhra Pradesh, Kerala,
Karnataka and Tamil Nadu
Retail franchise:
Currently: 540 More supermarket store and nine
hypermarket stores totalling 1.7mn sq ft
Store size: Super markets average 2,500-3000 sf
and hypermarket stores 55,000 sf
Expansion plans : 100 supermarkets and 8
hypermarkets this year; 14 hypermarkets next
year
ABRLs merchandise mix is 15% fresh food, fruits
& vegetables, 50% grocery food & staples, 25-
30% FMCG and 5-10% general merchandise
Its loyalty program ‘Clubmore’ has 2.6m
customers, of which 0.4m are currently active
News and updates
The company’s growth plans are focused on South
India for supermarkets but pan-India for the
hypermarkets format
The company plans to have 1600 supermarkets and
65 hypermarkets by 2016 with investments of Rs180-
200m/year in hypermarkets and Rs0.4m per year in
supermarkets
The company expect to break even at the PAT level by
FY15 and Ebitda level by FY13
No comments:
Post a Comment