Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
4QFY11 results
Pantaloon reported disappointing results for 4QFY11. Revenue growth
was 15% YoY despite healthy space growth with same store sales growth
continuing to decelerate. However margin performance was healthy at
9.1% and supported 37% pre-exceptional PBT growth. Inventory buildup
has continued (+Rs2.5bn in 4Q) and core retail debt stands at Rs42bn
(Rs49bn including convertibles). We downgrade earnings by 6-8% and
maintain our Rs235 price target. Whilst FDI remains an upside risk, we
see the risk reward as unfavourable given high gearing (1.12x) and a
softening consumer environment. Retain U-PF.
Top line continues to slow; margins uptick visible
Core retail (standalone + Future Value Retail) sales growth was 15% YoY with
same store sales growth of 7.5% in value retail, 11.4% in lifestyle and -4.5%
in home retail. Same store sales growth in value and home retail has
continued to slow. The company attributes this to inflationary pressures on
consumer spending and rising prices in garments. The company is hopeful of
these pressures easing heading into the festive season. Space growth was
0.39m sq ft in 4Q with another 1m expected in 1Q. Ebitda margins were up
30bps QoQ at 8.8%. Ebitda and pre-exceptional PBT grew 38% YoY. PAT
declined 60%, due to exceptional items in 4Q10. FY11 saw sales growth of
23%, Ebitda margin decline of 50bps and nor. PAT growth of 13% YoY.
Balance sheet concerns heighten
Pantaloon’s balance sheet performance was disappointing. Inventory
increased by Rs2.5bn during the quarter and Rs11.9bn for the year.
Management attributed this to a build up of inventory for new store openings
and inflation linked increases. The focus on inventory turns seen in FY10
seems to have evaporated with four successive quarters of inventory rising
more than Rs2.5bn/quarter. Inventory per square foot has risen consistently
through FY11. Capex for the year was ~Rs10.2bn. Regular debt for core retail
stood at Rs42bn (~Rs38bn in 3Q) and debt/equity at 1.12x. Besides this,
Pantaloon has issued compulsorily convertible debentures in Future Value
Retail. While these have a 5% coupon, Pantaloon guarantees a 14%
annualised return on the investment. Including these, debt is nearly Rs49bn.
Earnings cut; maintain U-PF
We downgrade revenues 1-3% on the back of lower same store sales but
increase our Ebitda margin estimates by 30bps. The downgrade is more
significant at net profit level (6-8% for FY12-13) due to higher depreciation
charges and leverage impact. We have retained our SOTP based price target
to Rs235, valuing the core retail business at 16.5x FY13 PE. While upside
risks from FDI remain, we do not see the risk reward as favourable given the
balance sheet concerns and softening environment. Retain U-PF.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
4QFY11 results
Pantaloon reported disappointing results for 4QFY11. Revenue growth
was 15% YoY despite healthy space growth with same store sales growth
continuing to decelerate. However margin performance was healthy at
9.1% and supported 37% pre-exceptional PBT growth. Inventory buildup
has continued (+Rs2.5bn in 4Q) and core retail debt stands at Rs42bn
(Rs49bn including convertibles). We downgrade earnings by 6-8% and
maintain our Rs235 price target. Whilst FDI remains an upside risk, we
see the risk reward as unfavourable given high gearing (1.12x) and a
softening consumer environment. Retain U-PF.
Top line continues to slow; margins uptick visible
Core retail (standalone + Future Value Retail) sales growth was 15% YoY with
same store sales growth of 7.5% in value retail, 11.4% in lifestyle and -4.5%
in home retail. Same store sales growth in value and home retail has
continued to slow. The company attributes this to inflationary pressures on
consumer spending and rising prices in garments. The company is hopeful of
these pressures easing heading into the festive season. Space growth was
0.39m sq ft in 4Q with another 1m expected in 1Q. Ebitda margins were up
30bps QoQ at 8.8%. Ebitda and pre-exceptional PBT grew 38% YoY. PAT
declined 60%, due to exceptional items in 4Q10. FY11 saw sales growth of
23%, Ebitda margin decline of 50bps and nor. PAT growth of 13% YoY.
Balance sheet concerns heighten
Pantaloon’s balance sheet performance was disappointing. Inventory
increased by Rs2.5bn during the quarter and Rs11.9bn for the year.
Management attributed this to a build up of inventory for new store openings
and inflation linked increases. The focus on inventory turns seen in FY10
seems to have evaporated with four successive quarters of inventory rising
more than Rs2.5bn/quarter. Inventory per square foot has risen consistently
through FY11. Capex for the year was ~Rs10.2bn. Regular debt for core retail
stood at Rs42bn (~Rs38bn in 3Q) and debt/equity at 1.12x. Besides this,
Pantaloon has issued compulsorily convertible debentures in Future Value
Retail. While these have a 5% coupon, Pantaloon guarantees a 14%
annualised return on the investment. Including these, debt is nearly Rs49bn.
Earnings cut; maintain U-PF
We downgrade revenues 1-3% on the back of lower same store sales but
increase our Ebitda margin estimates by 30bps. The downgrade is more
significant at net profit level (6-8% for FY12-13) due to higher depreciation
charges and leverage impact. We have retained our SOTP based price target
to Rs235, valuing the core retail business at 16.5x FY13 PE. While upside
risks from FDI remain, we do not see the risk reward as favourable given the
balance sheet concerns and softening environment. Retain U-PF.
No comments:
Post a Comment