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UBS Investment Research
Indian Retail Sector
Steady progress towards FDI in retail
Planning Commission in favour of FDI – a huge positive for retail
The Deputy Chairman of the Planning Commission Dr Montek Singh Ahluwalia,
in a recent interview with The Economic Times stated that the Planning
Commission is in favour of FDI in retail and the adverse impact of opening retail
to FDI has been exaggerated. Retail is expected to double in the next 7-8 years, and
there is scope for all kinds of retail to grow.
MNC interest in Indian retail growing
Interest of MNC’s in the Indian retail space had picked up with a spate of
partnerships announced with domestic retailers in the recent past - Wal-Mart has a
tie up with Bharti, Carrefour has been in talks with the Future Group, Tesco and
Woolworths’ with Trent Ltd. Though the importance of FDI was emphasized in
Budget FY12, the Finance Minister failed to provide any details on the roadmap.
Pantaloon Retail to benefit
Pantaloon Retail is in a sweet spot, being the largest retailer in India. Pantaloon
Retail’s action plan includes restructuring the group to enable FDI in its pure retail
business. It has take a step in this direction by merging home solutions business,
divesting non-core operations and creating a wholly owned subsidiary FVRL for
its value retail business. We rate the stock ‘Buy’ with a price target of Rs350, our
PT from a DCF-based method and explicitly forecast long-term valuation drivers
using UBS’s VCAM tool; WACC of 12%, terminal growth rate of 5%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Indian Retail Sector
Steady progress towards FDI in retail
Planning Commission in favour of FDI – a huge positive for retail
The Deputy Chairman of the Planning Commission Dr Montek Singh Ahluwalia,
in a recent interview with The Economic Times stated that the Planning
Commission is in favour of FDI in retail and the adverse impact of opening retail
to FDI has been exaggerated. Retail is expected to double in the next 7-8 years, and
there is scope for all kinds of retail to grow.
MNC interest in Indian retail growing
Interest of MNC’s in the Indian retail space had picked up with a spate of
partnerships announced with domestic retailers in the recent past - Wal-Mart has a
tie up with Bharti, Carrefour has been in talks with the Future Group, Tesco and
Woolworths’ with Trent Ltd. Though the importance of FDI was emphasized in
Budget FY12, the Finance Minister failed to provide any details on the roadmap.
Pantaloon Retail to benefit
Pantaloon Retail is in a sweet spot, being the largest retailer in India. Pantaloon
Retail’s action plan includes restructuring the group to enable FDI in its pure retail
business. It has take a step in this direction by merging home solutions business,
divesting non-core operations and creating a wholly owned subsidiary FVRL for
its value retail business. We rate the stock ‘Buy’ with a price target of Rs350, our
PT from a DCF-based method and explicitly forecast long-term valuation drivers
using UBS’s VCAM tool; WACC of 12%, terminal growth rate of 5%.
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