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UBS Investment Research
Pantaloon Retail (India) Ltd.
C atalysts ahead, results in line
Revenue growth +23.4% yoy, EBITDA growth +17% yoy.
Pantaloon Retail (PRIL) reported FY11 core business revenues of Rs110bn
(+23.4% YoY), in line with UBS-e. EBITDA grew 17% YoY to Rs9.6bn (UBS-e
Rs9.4bn). PAT in line with UBS-e despite lower other income (-75% yoy ). Other
income in the base included profit from investments sale.
Robust growth drives revenues
Same-store-sales growth (SSSG) for value, lifestyle and home retailing was 10.3%,
15.6% and 8.3%, respectively vs. 9.4%, 13.65% and 12.02% in FY10. End June
11, retail space under operations ended at 15.23mn sq ft (+ 17% yoy). Overall
revenues per sq ft for FY11 grew 5% yoy to Rs7,231/sq ft
Catalysts expected- FCH divestment
The management has guided for near term divestment of FCH, which we believe
will be a positive catalyst for the stock. For core retail, debt/equity ratio is at 1.12x
which we believe has been built into the stock. FDI in retail is another catalyst;
PRIL is the largest retailer in India and is a key beneficiary of this change.
Valuation: Buy rating, Rs400 price target
We maintain our Buy rating and price target of Rs400. 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 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.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Pantaloon Retail (India) Ltd.
C atalysts ahead, results in line
Revenue growth +23.4% yoy, EBITDA growth +17% yoy.
Pantaloon Retail (PRIL) reported FY11 core business revenues of Rs110bn
(+23.4% YoY), in line with UBS-e. EBITDA grew 17% YoY to Rs9.6bn (UBS-e
Rs9.4bn). PAT in line with UBS-e despite lower other income (-75% yoy ). Other
income in the base included profit from investments sale.
Robust growth drives revenues
Same-store-sales growth (SSSG) for value, lifestyle and home retailing was 10.3%,
15.6% and 8.3%, respectively vs. 9.4%, 13.65% and 12.02% in FY10. End June
11, retail space under operations ended at 15.23mn sq ft (+ 17% yoy). Overall
revenues per sq ft for FY11 grew 5% yoy to Rs7,231/sq ft
Catalysts expected- FCH divestment
The management has guided for near term divestment of FCH, which we believe
will be a positive catalyst for the stock. For core retail, debt/equity ratio is at 1.12x
which we believe has been built into the stock. FDI in retail is another catalyst;
PRIL is the largest retailer in India and is a key beneficiary of this change.
Valuation: Buy rating, Rs400 price target
We maintain our Buy rating and price target of Rs400. 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 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.
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