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PANTALOON RETAIL INDIA PVT.LTD.,Annual Coverage Report05, Jan2011
Market Data
Sector Retail
BSE 523574
NSE PANTALOONR
Reuters PART.BO
Bloomberg PF@IN
ISIN Demat INE623B01027
Face Value 2.00
Book Value 146.68
52 week H/L 527.90-338.70
No. of shares o/s 19.61 Cr.
Beta 1.11Market Cap.(Rs. Cr) 7416.50
Avg. Volume 70985
Sensex 19521.25
Free Foat (Cr.) 4358
CMP 378.20
Target Price 401.97
Upside 6.28%
EXECUTIVE SUMMARY
Pantaloon Retail (India) Limited, is Indias leading retailer that operate
multiple retail formats in both the value and lifestyle segment of th
Indian consumer market.
PRIL operates over 16 million square feet of retail space, has over 100
stores across 73 cities in India and employs over 30,000 people.
PRIL to invest capex of around 21 Cr. for the next 3 years and the fun
will be used for adding 15-million sq.ft. retail space into its portfolio b
2014.
In the next 3 yrs The Govt. Of India will allow Foreign DirecInvestments (FDI) in Multi-brand retail.
PRIL board has approved rising up to Rs 750 Cr via Qualifie
institutional placement (QIP).
PRIL intends to set up 155 Big Bazaar stores by 2014, raising its tota
network to 275 stores.
PRIL has transferred its value retail business to its wholly ow
subsidiary, Future Value Retail Ltd.
Pantaloon retail merged the home solutions business of its subsidiar
Home Solutions Retail (India) Limited (HSRIL) with itself.
The Company has recorded growth in both the top line as well as i
bottom line despite the transferring of value retail business operation
PRIL had posted a consolidate turnover of Rs 9786.94 Cr in 2009-10 a
compared to Rs 7669.04 Cr. last year representing an increase of 28%.
It posted a consolidated net profit of Rs 67.49 Cr, as against Rs 10.07 C
the year-ago period which is increased by 51.1% for the year.
The consolidated EBITDA for FY 2009-10 is Rs 952.23 Cr, compared t
Rs 609 Cr, in FY 2008-09.
BSE India share index
Accumulate
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Key Financials
Y/E June (Rs Cr) FY 2009 FY 2010 FY 2011E FY 2012E FY 2013P FY 2014P FY 2015P
Net Sales 7669.04 9786.94 12196.12 15648.48 19500.54 23715.82 29717.59
% Change 31% 28% 25% 28% 25% 22% 25%
Net Income 10.10 67.49 206.64 92.04 315.96 378.19 187.76
Net Income Margin (%) 0.1% 0.7% 1.7% 0.6% 1.6% 1.6% 0.6%
EBITDA Margin (%) 7.8% 9.6% 9.5% 7.6% 9.2% 9.2% 7.4%
EPS (Rs) 0.63 3.44 10.54 4.69 16.11 19.29 9.57
P/E() 60.47 10.99 35.89 80.58 23.47 19.61 39.50
P/BV() 2.43 2.58 2.36 1.51 1.08 0.85 0.66
RoE (%) 0.004 0.023 0.066 0.019 0.046 0.043 0.017
RoCE (%) 0.05 0.07 0.07 0.05 0.07 0.07 0.06
EV/Sales () 1.07 0.84 0.67 0.53 0.42 0.35 0.28
EV/EBITDA 13.50 8.63 7.04 6.85 4.53 3.76 3.73
Synopsis:
Revenues
Consolidated Total revenue for the year 2009-10 was reported to Rs 9913 Cr, as compared to Rs
7764.8 Cr in FY 2008-09, representing a growth percentage of 27.7% because of the improving
economic scenario and consumption growth. The home retail business, which was languishing
with an 11 per cent fall in revenues the previous year, saw 12 per cent growth in FY10. The
value retail business maintained a steady 9.5 per cent growth and Lifestyle business saw a 14%
growth from 6% growth last year. However the net sales fell by 3% from last year to continued
year of global economic crisis. So, while calculating the estimated sales I have decreased net
sales by 3% on y-o-y basis.
Expenses
Consolidated Cost of sales increased from FY 2008-09 Rs 7764.8 Cr to Rs 6682.84 Cr
representing a growth of 30.33%. Depreciation costs increased from Rs 206.57 Cr last year to Rs
278.32 Cr present year and it will continue to remain higher due to the further expansion ofstores. Interest & Financial charges outflow has increased from Rs 418.54 Cr in 2008-09 to Rs
493.38 Cr in 2009-10. The increase in interest and financial charges is on account of HSRIL
Merger impact and additional borrowing for funding the growth plans of the company and in
future it can be controlled by better working capital management. For calculating the estimated
expenses I have increase it by 0.50% y-o-y basis because to bring in new customers and
acquiring larger share the company adopts new approaches to understand customers and for
advertising strategies.
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Profitability
The consolidated EBIDTA for FY 2009-10 is Rs 952.24 Cr, compared to Rs 609 Cr in FY 2008-09.
The consolidated PAT for FY 2009-10 is Rs 76.35 Cr, compared to a loss of Rs 7.46 Cr in FY 2008-
09. Profit after minority interest increased from Rs 10.07 Cr in FY 2008-09 to Rs 67.49 Cr in FY
2009-10, representing an increase of 570%. With the opening up of FDI, foreign players alongwith new domestic players will enter in the near future, enhancing the modern retail market
which is currently 5%-7% penetrated, because of this the company will continue with an
upward trends in top-line as well as in bottom line in future also.
Forward Plans
(i) The company has planned to add around 2.5 million to 3.5 million square feet of
space during the forthcoming year and to maintain this pace for the next two to
three years.
(ii) The company has planned to complete the initiative of concentrating in pure
retail play and would be coming up with few more approvals to demerge / sale /transfer the other non-retail non-core businesses.
(iii)Pantaloon also announced plans to raise money through the sale of shares or
convertible warrants for funding its expansion and diversification plans.
Risk & Concerns
The external environment and economy poses the main risk to the company in the form of
another downturn. Also, increasing inflation is considered a threat which would increase overall
input cost, as well as, conversion costs. Currently, with the turnaround in the economy, rising
interest and people cost poses a business risk and needs to be monitored.
Valuation Methodology
DCF Valuation method has been used for arriving at the fair value of Pantaloon Retail India Pvt.
Ltd., as explained below:
Assumptions:
Risk Free Rate (Rf) of 8.1%, based on 10-year Government Bond Rate.
Beta () of 1.11, calculated using slope function.
Market Return Rate (Rm) of 2.6%, based on Sensex returns of 18-years period
from Sep-1992 to Dec-2010 CAGR.
Based on above and using Capital Asset Pricing Model (CAPM), I have arrived at a cost of Equity
of 14% and a WACC of 11.15%.
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DCF Calculation
Rs in Crores 2011E 2012E 2013P 2014P 2015P
EBITDA 1166.93 1200.28 1815.53 2188.66 2203.00
EBIT 820.79 757.02 1263.93 1518.51 1364.12
(-) Cash Taxes @35% (287.28) (264.96) (442.38) (531.48) (477.44)
Tax Effected EBIT 533.51 492.07 821.56 987.03 886.68
(+) Depreciation & Amortization 346.14 443.25 551.60 670.15 838.88
(-) Capital Expenditure (700) (700) (700) (700) (700)
(+/-) Changes in net working Capital (795.87) (1079.81) (1353.86) (1327.03) (1785.28)
Unlevered Free Cash Flow (FCF) (616.22) (844.49) (680.70) (369.85) (759.72)
WACC@ 11.15%
NPV of Unlevered FCF @ 11.15% (2423.92)
EBITDA Multiple Method
Terminal Value Undiscounted Discounted Implied Perpetual Growth
Rate
EBITDA Multiple 6.00 13217.99 7.792.04 4%
8.50 18725.49 11038.72 6%
DCF Range(Implied Enterprise Value) 5368.12 8614.80
Equity Value 4636.00 7882.68
Implied Price Per Share 236.41 401.97
DDF Sensitivity Analysis
Terminal EBITDA Multiple
8.0x 9.0x 10.0x
WACC
9.0% 416.36 489.37 562.38
10.0% 393.53 463.28 533.04
11.0% 371.96 438.63 505.29
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Financial Statement
Pantaloon Retail (India) LimitedFinancial Summary
(All figures in Crores, except per share data)
Actual Estimated Projected
Fiscal 2008 2009 2010 2011E 2012E 2013P 2014P 2015P
Total Revenue 5,866.50 7,764.80 9,913.00 12,328.48 15,787.46 19,646.47 23,869.05 29,878.48
% Growth 64.5% 32.4% 27.7% 24.4% 28.1% 24.4% 21.5% 25.2%
Gross Profit 1,957.20 2,637.55 3,230.16 4,061.56 5,403.68 6,428.37 7,912.27 10,307.52
% Growth 63.0% 34.8% 22.5% 25.7% 33.0% 19.0% 23.1% 30.3%
Gross Profit Margin 33.4% 34.0% 32.6% 32.9% 34.2% 32.7% 33.1% 34.5%EBITDA 326.49 609.00 952.23 1,166.93 1,200.28 1,815.53 2,188.66 2,203.00
% Growth 43.4% 86.5% 56.4% 22.5% 2.9% 51.3% 20.6% 0.7%
EBITDA Margin 5.6% 7.8% 9.6% 9.5% 7.6% 9.2% 9.2% 7.4%
EBIT 208.28 402.43 673.91 820.79 757.02 1,263.93 1,518.51 1,364.12
% Growth 16.1% 93.2% 67.5% 21.8% (7.8)% 67.0% 20.1% (10.2)%
EBIT Margin 3.6% 5.2% 6.8% 6.7% 4.8% 6.4% 6.4% 4.6%
Net Income#
21.93 10.07 67.49 206.64 92.04 315.96 378.19 187.76
% Growth (38.3)% (54.1)% 570.2% 206.2% (55.5)% 243.3% 19.7% (50.4)%Net Income Margin 0.4% 0.1% 0.7% 1.7% 0.6% 1.6% 1.6% 0.6%
Diluted EPS 1.45 0.63 3.44 10.54 4.69 16.11 19.29 9.57
% Growth (43.7)% (56.9)% 450.2% 206.2% (55.5)% 243.3% 19.7% (50.4)%
Actual 2010
Rs %
Cash & Equivalents
(Closing bal.)
286.45 Total Debt / Total
Capitalization
89.8%
Total Debt / EBITDA 1.0x
Total Debt 660.79 0.6% Net Debt / EBITDA 0.7x
Minority Interest 318.30 29.2% S&P Bond Rating AA-
Total Stockholders'
Equity
110.75 10.2% Moody's Bond
Rating
Aa3
Total Capitalization 1,089.84 100.0% Fitch Ratings A-
Note: Fiscal year ends June 30 of the next year.
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Pantaloon Retail (India) Limited
Income Statement
(All figures in crores, except per share data)
Actual Estimated Projected
Fiscal 2009 2010 2011 2012 2013 2014 2015
Revenue
Net Sales 7,669.04 9,786.94 12,196.12 15,648.48 19,500.54 23,715.82 29,717.59
Other Income, net 95.76 126.06 132.36 138.98 145.93 153.23 160.89
Total Revenue 7,764.80 9,913.00 12,328.48 15,787.46 19,646.47 23,869.05 29,878.48
Cost of Sale(COGS) (5,127.25) (6,682.84) (8,266.92) (10,383.78) (13,218.10) (15,956.77) (19,570.96)
Gross Profit 2,637.55 3,230.16 4,061.56 5,403.68 6,428.37 7,912.27 10,307.52
Dep. & Amort. (206.57) (278.32) (346.14) (443.25) (551.60) (670.15) (838.88)
Operating, SG&A Exp. (2,028.55) (2,277.93) (2,894.63) (4,203.40) (4,612.84) (5,723.61) (8,104.52)
Operating Income (EBIT) 402.43 673.91 820.79 757.02 1,263.93 1,518.51 1,364.12
Interest Expense
(Finance charges)
(418.54) (493.38) (482.63) (594.98) (757.18) (915.79) (1,054.12)
Pre-Tax Income (16.11) 180.53 338.15 162.04 506.75 602.72 310.00
Income Taxes 10.25 (107.30) (118.35) (56.72) (177.36) (210.95) (108.50)
Earlier year's Income
tax
(0.30) 3.17 (3.17) (3.17) (3.17) (3.17) (3.17)
Share in loss of
associated co.
(5.84) (6.31) (6.31) (6.31) (6.31) (6.31) (6.31)
Goodwill written
back/written off
(1.08) - - - - - -
Profit on sale ofsubsidiary/joint venture
- - - - - - -
Prior period items (1.30) (0.05) (1.00) (1.00) (1.00) (1.00) (1.00)
Minority Interest 24.45 (2.55) (2.68) (2.81) (2.95) (3.10) (3.25)
Net Income 10.07 67.49 206.64 92.04 315.96 378.19 187.76
Diluted Shares O/S 16.10 19.61 19.61 19.61 19.61 19.61 19.61
Diluted Earnings per
Share
0.63 3.44 10.54 4.69 16.11 19.29 9.57
EBITDA 609.00 952.23 1,166.93 1,200.28 1,815.53 2,188.66 2,203.00
EBITDA Margin 8% 10% 9% 8% 9% 9% 7%
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Pantaloon Retail (India) Limited
Balance Sheet(All figures in crores, except per share data)
Actual Estimated Projected
Fiscal 2009 2010 2011 2012 2013 2014 2015
ASSETS
Current Assets
Cash & Equivalents 202.54 286.45 200.00 200.00 200.00 200.00 200.00
Sundry Debtors 306.61 391.43 487.79 625.86 779.93 948.52 1,188.56
Inventories 2,191.25 2,491.18 3,036.38 3,756.99 4,710.06 5,598.51 6,759.33
Loans & Advances 1,910.55 2,661.95 3,317.22 4,256.23 5,303.95 6,450.47 8,082.89
Other Current Assets 12.16 15.71 19.58 25.12 31.30 38.07 47.70
Total Current Assets 4,623.11 5,846.72 7,060.97 8,864.20 11,025.24 13,235.56 16,278.48
Net PPE 2,200.93 2,646.81 3,000.67 3,257.42 3,405.82 3,435.67 3,296.79
Capital work-in-progress 429.72 304.38 379.31 486.68 606.48 737.58 924.24
Investments 897.81 909.77 1,133.72 1,454.64 1,812.72 2,204.56 2,762.47
Other Assets and
Deferred Charges
2.49 - - - - - -
TOTAL ASSETS 8,154.06 9,707.68 11,574.67 14,062.95 16,850.26 19,613.37 23,261.98
LIABILITIES
Current Liabilities
Current Liabilities 1,351.94 1,970.63 2,455.72 3,150.87 3,926.49 4,775.25 5,983.73
Provisions 52.99 80.17 99.90 128.18 159.74 194.27 243.43
Total Current Liabilities 1,404.93 2,050.80 2,555.63 3,279.05 4,086.23 4,969.52 6,227.16
Long-Term Debt -
Secured loans
3,285.99 3,257.13 4,352.04 4,352.04 4,352.04 4,352.04 4,352.04
Unsecured Loans 572.27 1,094.91 1,094.91 1,094.91 1,094.91 1,094.91 1,094.91
Deferred Income Taxes& Other
4.02 110.17 110.17 110.17 110.17 110.17 110.17
Minority Interest 384.59 318.30 318.30 318.30 318.30 318.30 318.30
TOTAL LIABILITIES 4,246.87 4,780.51 5,875.42 5,875.42 5,875.42 5,875.42 5,875.42
SHAREHOLDERS' EQUITY
Common Stock - Share
capital
107.59 110.75 110.75 110.75 110.75 110.75 110.75
Share Application Money 44.96 16.42 16.42 16.42 16.42 16.42 16.42
Equity Warrants 22.88 122.88 122.88 122.88 122.88 122.88 122.88
Share capital (Pending
allotment)
- 64.66 - - - - -
Reserve & Surplus 2,326.83 2,561.66 2,893.57 4,658.42 6,638.56 8,518.38 10,909.35
TOTAL SHAREHOLDERS'
EQUITY
2,502.26 2,876.37 3,143.62 4,908.47 6,888.61 8,768.43 11,159.40
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY
8,154.06 9,707.68 11,574.67 14,062.94 16,850.26 19,613.37 23,261.98
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Pantaloon Retail (India) Limited
Cash Flow Statement
(All figures in crores, except per share data)
Estimated Projected
Fiscal 2011 2012 2013 2014 2015Cash From Operating Activities:
Net Income 206.64 92.04 315.96 378.19 187.76
Plus: Depreciation & Amortization 346.14 443.25 551.60 670.15 838.88
Changes in Working Capital:
(Increase)/Decrease in Sundry Debtors (96.36) (138.08) (154.06) (168.59) (240.04)
(Increase)/Decrease in Inventories (545.20) (720.61) (953.07) (888.45) (1,160.82)
(Increase)/Decrease in Other Current Assets (3.87) (5.54) (6.18) (6.77) (9.63)
(Increase)/Decrease in Loans & Advances (655.27) (939.01) (1,047.72) (1,146.51) (1,632.42)
Increase/(Decrease) in Provisions 485.09 695.14 775.62 848.76 1,208.47
Increase/(Decrease) in Current Liabilities 19.73 28.28 31.55 34.53 49.16
Total Change in Working Capital (795.87) (1,079.81) (1,353.86) (1,327.03) (1,785.28)
Total Cash From Operating Activities (243.09) (544.52) (486.30) (278.69) (758.63)
Cash From Investing Activities:
(Increase)/Decrease in Capital work in
progress
74.93 107.37 119.80 131.10 186.66
(Increase)/Decrease in Investments (223.95) (320.92) (358.08) (391.84) (557.91)
(Increase)/Decrease in Capital Expenditures (700.00) (700.00) (700.00) (700.00) (700.00)
Total Cash From Investing Activities (849.02) (913.55) (938.28) (960.74) (1,071.25)
Cash From Financing Activities:
Issuance of Common Stock - - - - -Common Stock Dividends (15.69) (16.47) (17.30) (18.16) (19.07)
Net (Purchase) / Reissuance of Treasury
Stock
- - - - -
Cash Available / (Required) Before Debt (1,107.80) (1,474.55) (1,441.88) (1,257.59) (1,848.95)
Debt Borrowing / (Repayment) 1,021.35 1,474.55 1,441.88 1,257.59 1,848.95
Total Cash From Financing Activities 1,005.66 1,458.08 1,424.58 1,239.43 1,829.89
Beginning Cash Balance 286.45 200.00 200.00 200.00 200.00
Change in Cash (86.45) - - - -
Ending Cash Balance 200.00 200.00 200.00 200.00 200.00
Average Cash Balance 243.23 200.00 200.00 200.00 200.00
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Financial Ratios
Pantaloon Retail (India) Limited
Financial Ratios
(All figures in crores, except per share data)Actual Estimated Projected
Fiscal 2009 2010 2011 2012 2013 2014 2015
Price Multiple
P/E Ratio 60.47 10.99 35.89 80.58 23.47 19.16 39.50
Price-to-Book Ratio 2.43 2.58 2.36 1.51 1.08 0.85 0.66
Price-to-Sales Ratio 0.79 0.76 0.61 0.47 0.38 0.31 0.25
Price-to- Cash Flow Ratio 10.00 7.79 6.36 6.18 4.09 3.39 3.37
Liquidity Analysis Ratios
Current Ratio 3.29 2.85 2.76 2.70 2.70 2.66 2.61
Quick Ratio 1.73 1.64 1.57 1.56 1.55 1.54 1.53
Net Working Capital Ratio 0.42 0.39 0.37 0.36 0.36 0.35 0.34
Profitability Analysis Ratios
Gross Profit Margin 0.34 0.33 0.33 0.34 0.33 0.33 0.34
Net Profit Margin 0.001 0.007 0.017 0.006 0.016 0.016 0.006
Return on Asset (ROA) 1.04 1.10 1.15 1.22 1.26 1.30 1.39
Return on Equity (ROE) 0.004 0.023 0.066 0.019 0.046 0.043 0.017
Return on Capital Employed
(ROCE)
0.05 0.07 0.07 0.05 0.07 0.07 0.06
Return on Investment (ROI) 0.50 0.75 0.80 0.58 0.77 0.76 0.55
Earnings Per Share (EPS) 0.63 3.44 10.54 4.69 16.11 19.29 9.57
Activity Analysis Ratios
Assets Turnover Ratio 1.04 1.10 1.15 1.22 1.26 1.30 1.39
Inventory Turnover Ratio 2.59 2.85 2.99 3.06 3.12 3.10 3.17
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Capital Structure Analysis
Cost of Debt 0.11 0.11 0.09 0.11 0.14 0.17 0.19
Debt to Equity Ratio 1.70 1.66 1.87 1.20 0.85 0.67 0.53
Interest Coverage Ratio 0.96 1.37 1.70 1.27 1.67 1.66 1.29
Market Value
Market Cap 6089.02 7416.50 7416.50 7416.50 7416.50 7416.50 7416.50
Book value per share 155.42 146.68 160.31 250.30 351.28 447.14 569.07
Dividend Per share 0.60 0.80 0.80 0.84 0.88 0.93 0.97
Cash Flow Indicator
Operating cash flow to sales 0.09 0.05 0.02 0.03 0.02 0.01 0.03
Growth Percentages
Total Operating Income 0.93 0.67 0.22 (0.08) 0.67 0.20 (0.10)
EBITDA 0.87 0.56 0.23 0.03 0.51 0.21 0.01
EBIT 0.93 0.67 0.22 (0.08) 0.67 0.20 (0.10)
Net Profit (0.54) 5.70 2.06 (0.55) 2.43 0.20 (0.50)
Sales 0.31 0.28 0.25 0.28 0.25 0.22 0.25
Dividend Policy Ratio
Dividend Yield 0.002 0.002 0.002 0.002 0.003 0.003 0.003
Dividend Payout Ratio 0.96 0.23 0.08 0.18 0.05 0.05 0.10
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Graphs
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
-
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
Percent
RsCr.
Year
Total Revenue Growth Trends
Total Revene % Growth
31.5%
32.0%
32.5%
33.0%
33.5%
34.0%
34.5%
35.0%
-
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
2008 2009 2010 2011E 2012E 2013P 2014P 2015P
Percentage
RsCr.
Year
Gross Profit and Gross Profit Margin Trends
Gross Profit Gross Profit Margin
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0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00
2008 2009 2010 2011E 2012E 2013P 2014P 2015P
Percentage
RsCr.
Years
EBITDA AND EBITDA Margin Trends
EBITDA EBITDA Margin
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
-
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
2008 2009 2010 2011E 2012E 2013P 2014P 2015P
Percentage
RsCr.
Year
EBIT & EBIT Margin Trends
EBIT EBIT Margin
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Peer Group Comparison
(All figures in Rs cr, except per share data)
Name of the Cos CMP (Rs.) Market Cap. P/E()Face
ValueSales Volume
Pantaloon Retail India 378.20 7416.50 10.99 2.00 9786.94 132303
Vishal Retail Ltd. 32.50 72.80 -0.17 10.00 269.42 10014Shopper Stop Ltd. 768.00 2833.92 51.92 10.00 454.52 10185
Trent Ltd 945.40 2741.66 47.10 10.00 182.80 1500
Provogue (India) Ltd 64.25 735.02 25.73 2.00 142.58 41197
0.0%
0.2%
0.4%
0.6%
0.8%1.0%
1.2%
1.4%
1.6%
1.8%
-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
Percent
age
RsCr
.
Year
Net Income & Net Income Margin Trend
Net Income Net Income Margin
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Company Overview
Pantaloon Retail (India) Limited, is Indias leading
retailer that operates multiple retail formats in both
the value and lifestyle segment of the Indian
consumer market. Headquartered in Mumbai(Bombay), the company operates over 16 million
square feet of retail space, has over 1000 stores
across 73 cities in India and employs over 30,000
people.
The companys leading formats include Pantaloons, a
chain of fashion outlets, Big Bazaar, a uniquely Indian
hypermarket chain, Food Bazaar, a supermarket
chain, blends the look, touch and feel of
Indian bazaars with aspects of modern retail like choice, convenience and quality and Central, a
chain of seamless destination malls. Some of its other formats include Brand Factory, Blue Sky,
aLL, Top 10 and Star and Sitara. The company also operates an online portal, futurebazaar.com.
The company operates120 Big Bazaar stores, 170 Food Bazaar stores, among other formats, in
over 70citiesacross the country, covering an operational retail space of over 6 million square
feet. As a focussed entity driving the growth of the group's value retail business, Future Value
Retail Limited will continue to deliver more value to its customers, supply partners,
stakeholders and communities across the country and shape the growth of modern retail in
India.Pantaloon Retail is the flagship company of Future Group, a business group catering to
the entire Indian consumption space.
During the fiscal year ended June 30, 2010 (fiscal 2010), the Company launched Sach
toothpaste and Ektaa. During fiscal 2010, its operational store space increased to 13.25 million
square feet, which includes around two million square feet of home business. During fiscal2010, the Company acquired the South African retailer Shoprites India business.
The company was formerly known as Pantaloon Fashions (India) Limited and changed its name
to Pantaloon Retail (India) Limited in July 1999. Pantaloon Retail (India) Limited was
incorporated in 1987 and is headquartered in Mumbai, India.
PantaloonRetail India Ltd.
Lifestyleretailing
Pantaloons Central Fashion Station ALL Mela
Value Retailing
Big Bazaar Food Bazaar
EntertainmentLeisure &
Sports
44.78
24.4
18.53
12.29
share holding Pattern (%)
As on Sep'10
Promoters
FII
DII
Others
Pantaloon Retail Operations
http://www.futurebazaar.com/http://www.futurebazaar.com/http://www.futurebazaar.com/ -
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Retail Industry Overview
The Indian retail industry is the fifth largest in the world.
Comprising of organized and unorganized sectors, Indiaretail industry is one of the fastest growing industries in
India, especially over the last few years. Though initially,
the retail industry in India was mostly unorganized,
however with the change of tastes and preferences of
the consumers, the industry is getting more popular
these days and getting organized as well. With growing
market demand, the industry is expected to grow at a
pace of 25-30% annually. The India retail industry is
expected to grow from Rs. 35,000 cr. in 2004-05 to Rs.
109,000 cr. by the year 2010.
Growth of Indian Retail
According to the 8th Annual Global Retail Development
Index (GRDI) of AT Kearney, India retail industry is the
most promising emerging market for investment. In
2007, the retail trade in India had a share of 8-10% in the
GDP (Gross Domestic Product) of the country. In 2009, it
rose to 12%. It is also expected to reach 22% by 2010.
According to a report by Northbride Capita, the India
retail industry is expected to grow to US$ 700 billion by
2010. By the same time, the organized sector will be 20%
of the total market share. It can be mentioned here that,the share of organized sector in 2007 was 7.5% of the
total retail market.
Challenges facing Indian retail industry
The tax structure in India favors small retail
business
Lack of adequate infrastructure facilities
High cost of real estate
Dissimilarity in consumer groups
Restrictions in Foreign Direct Investment Shortage of retail study options
Shortage of trained manpower
Low retail management skill
http://3.bp.blogspot.com/_1pKvii0Z9Cs/RnoUNuBUKVI/AAAAAAAAAr0/Qy6nWSQgpck/s1600-h/percentageshare.gifhttp://4.bp.blogspot.com/_1pKvii0Z9Cs/RnoUo-BUKXI/AAAAAAAAAsE/qRVFAuHn_8g/s1600-h/urban+rural+share.gifhttp://3.bp.blogspot.com/_1pKvii0Z9Cs/RnoUNuBUKWI/AAAAAAAAAr8/klSKm-jML7s/s1600-h/rura+urban+share.gif -
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The Future
The retail industry in India is currently growing at a great pace and is expected to go up to US$
833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a
CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone
up and is also expected to go up further in the future. In the last four year, the consumerspending in India climbed up to 75%. As a result, the India retail industry is expected to grow
further in the future days. By the year 2013, the organized sector is also expected to grow at a
CAGR of 40%.
Format-wise urban investment in retail expected in next 5 years
Format % Share
Hypermarket 38%
Supermarket 28%
Specialty Store 22%Cash N Carry 16%
Department Store 2%
Format Expected By 2011
Format Hypermarket Supermarket
Specialty
&
Dept.Store
Cash N Carry Total
New Retail Space(Min. Sq. Ft.)
218 79 93 66 455
Retail Space/Floor
Staff400 300 400 600 1700
No. of Front end Staff 544 264 132 110 1149
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Investment Opinion
Pantaloon retail has a strong retail presence across India with 16 million retail space and it isexpected to grow by more 2.5 million to 3.5 million square feet of space during the forthcoming
year. The company enjoys a strategic advantage over its competitors in terms of its strategy to
focus on value retail, understanding of the consumer mindset, sourcing capabilities and
presence across all formats. I prefer the company because it has performed well in spite of the
tough economic conditions which have severely impacted its peers. PRIL is capable of enjoying
profits at the time when its competitors were reeling under sales and margin pressure. Thus, I
expect the company to grow further. Due to the correction in the stock markets, PRIL is
available at an attractive market price. Backed by its expansion plans and an improving Industry
conditions, I expect the stock to perform well in the coming years. I recommend an
Accumulate on the stockwith a Target Price of Rs 401.97.
Rating (Returns)
BUY (> 15%) Accumulate (5% to 15%) Neutral (-5% to 5%)
Reduce (-5% to 15%) Sell (< - 15%)
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Disclaimer:
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exceptionally used as the basis for any investment decision. Nothing in this document should
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action based upon it. Each recipient of this document should make necessary investigations asthey consider important to arrive at an independent evaluation of an investment in the
securities of the companies referred to in this document (including the merits and risks
involved). This report has been made based on information that I consider reliable and are
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or damage that may arise to any person from any inadvertent error in the information
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