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Retail
Whilst same store sales growth momentum coming into the quarter was
strong, price escalation in garments as well as toughening comparables will
likely create a headwind
Overall we expect strong growth in sales to continue and expect sales growth
of between 19-50% for the retailers under our coverage.
For Pantaloon, we expect a 28% yoy increase in Ebitda as the process of
margin compression seen through the preceding four quarters annualises and
margins expand slightly on a YoY basis to 8.8%. Reported PAT falls 33% YoY
due to Rs751m of exceptional gain last year.
For Shoppers Stop, we expect revenue growth to moderate to 19% as the
price inflation seen in garments impacts volumes. We expect Ebitda to
increase by 28%, continuing the trend of margin improvement seen in FY11,
and the company to report a 51% increase in profit on a base that was
dragged down by high interest costs, since reduced due to the equity issuance
last year.
For Titan, we expect this to be the last strong quarter in the current cycle. We
build in a deceleration in growth in jewellery to 36% against a high base. This,
and an on-track watches performance, drive 32% yoy growth in sales while
annualisation of the product mix improvement visible from 2QFY11 drives a
50 bps improvement in Ebitda margins and 39% yoy growth in profits.
For Jubilant, we expect growth to remain elevated at 50% and margins to
expand 75bps QoQ as the benefit of the April price hikes comes through
(down 71bps YoY on a high base). Whilst PBT growth is a strong at 54% YoY,
the rising tax rate drags down PAT growth to 32% YoY.
We maintain our O-PF on Jubilant Foodworks, U-PF on Shoppers Stop and
Pantaloon and SELL on Titan.
Key things to watch out for: Trend in same store sales (SSS) growth, impact
of price hikes in garment formats, gross margins in different formats, impact
of inflation on revenue growth and margins, outlook for garments, trend in
employee costs, and progress in Pantaloon's restructuring
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