RESULT UPDATE
PANTALOON RETAIL
Festivals cheer sales, but debt still a sore point
India Equity Research| Retail
Pantaloon Retail’s (PRIL) core retail performance was in line with our
expectations on both revenue and PAT fronts in December 2012 quarter;
9.6% YoY sales growth got full benefit of festive season demand. Interest
burden (down 0.9% YoY, 11% QoQ; 95.8% of PBIT) continued to weigh
heavily on profit. Same store sales (SSS) growth at 12.7% recovered in life
style retail (highest in past eight quarters; 10.8% in September 2012
quarter) and value retail at 5.1% (highest in past six quarters; 0.2% in
September 2012 quarter). Weak performance continued in home retail
with decline of 3.4% YoY SSS growth, (down 3.5% in September 2012
quarter). PRIL’s lifestyle SSS growth was in line with Shoppers Stop’s
departmental format (12.5% YoY) while that of value retail outperformed
HyperCity (mere 3% YoY). Though gross retail space addition was 0.41mn
sq ft, net addition was a mere 0.02mn sq ft owing to some store closures
which HUL too had highlighted (shut 1 e-Zone store, 7 BB and 1 FB store).
We expect PRIL to benefit from business realignment to simplify structure;
this will attract investments and sharpen focus. Maintain ‘HOLD’.
EDELWEISS 4D RATINGS
Absolute Rating
HOLD
Rating Relative to Sector
Underperformer
Risk Rating Relative to Sector
High
Sector Relative to Market
Underweight
MARKET DATA (R: PART.BO, B: PF IN)
CMP
: INR 200
Target Price
: INR 242
52-week range (INR)
: 276 / 124
Share in issue (mn)
: 215.7
M cap (INR bn/USD mn)
: 45/ 837
Avg. Daily Vol.BSE/NSE(‘000) : 8.3
SHARE HOLDING PATTERN (%)
Current Q2FY13
Q1FY13
Promoters *
43.7
43.7
43.7
Interest burden, though contained, weighs on profit
MF's, FI's & BK’s
14.3
11.3
11.9
PRIL’s EBITDA rose 6.4% YoY; EBITDA margin declined marginally 26bps YoY despite
135bps and 52bps YoY reduction in COGS and staff costs, due to 83bps and 130bps YoY
rise in rent and other expenses. PAT plunged a whopping 66.4% YoY to INR45mn.
Consolidated debt dipped to INR69.9bn (December 2012) from INR71.5bn (June 2011).
FII's
22.0
22.0
22.4
Others
20.0
23.1
22.1
:
* Promoters pledged shares
(% of share in issue)
27.6
PRICE PERFORMANCE (%)
Deal and realignment process on track
The demerger of Pantaloon retail format is likely to come through by March 2013. The
realignment process into three separate entities is likely to be completed by
September 2013. These developments will help further reduce debt by INR28bn.
Stock
Nifty
EW Retail
Index
1 month
(7.8)
(5.2)
10.5
3 months
3.5
2.2
12.9
12 months
113.4
6.1
5.9
Outlook and valuations: Cautious; maintain ‘HOLD’
SSS growth in December 2012 posted robust recovery, as expected, but we will closely
monitor its sustainability. We like PRIL’s initiative to simplify structure; also, pick up in
deleveraging steps adopted by the company enthuse us. At CMP the stock is trading at
0.78x CY13E and 0.73x CY14E EV/sales. We continue to maintain ‘HOLD/SU’.
Financials - Core Retail
(INR mn)
Year to DecemberQ6FY12 Q2FY12
Net revenues
% change Q5FY12 % change
CY12
CY13E
CY14E
31,708
28,933
9.6
30,600
2,780
2,612
6.4
2,647
5.0
16,131
10,641
11,872
PAT
45
135
(66.4)
29
54.2
620
1,409
1,957
Diluted EPS (INR)
0.2
0.6
(66.4)
0.1
54.2
2.9
6.5
9.0
69.9
0.72
2.0
30.8
0.78
3.6
22.1
0.73
4.2
EBITDA
3.6 180,239 115,662 128,342
Diluted P/E (x)
EV/Sales (x)
ROAE (%)
No s represent co re retail business (P RIL+ FVRL); FY12 includes 18 mo nths perfo rmance
Edelweiss Research is also available on www.edelresearch.com,
Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset.
Abneesh Roy
+91 22 6620 3141
[email protected]
Hemang Gandhi
+91 22 6620 3148
[email protected]
Pooja Lath
+91 22 6620 3075
[email protected]
February 25, 2013
Edelweiss Securities Limited
Retail
Consolidating low profitability stores
With addition of 0.41mn sq ft gross retail space, PRIL’s total retail space stands at 16.38mn
sq ft (net addition of a mere 0.02mn sq ft) owing to consolidation in the Big Bazaar format.
PRIL opened 2 Pantaloons, 4 Brand Factory and 3 e-Zone stores in the lifestyle segment and
6 Big Bazaar and 2 FBB stores in the value segment. At the same time in the December 2012
quarter PRIL shut 1 e-Zone store, 7 BB and 1 FB store. The store closures have been in areas
where profitability has been low and in some places the old stores have been replaced by
new refurbished stores in the same area.
Inventory days surprisingly swell
Core retail inventory days have increased to 122 days as on December 2012 from 102 days
in June 2011.
Debt marginally down YoY
Consolidated debt has reduced to INR69.9bn as on December 2012 from INR71.5bn as on
June 2011. Interest burden (down 0.8% YoY and 10.8% QoQ; 95.7% of PBIT) though contained
continued to weigh heavily on profit. The sequential reduction is primarily attributable to
lower cost of debt on account of renegotiation of interest rate.
Outlook and valuations: Cautious; maintain ‘HOLD’
We laud PRIL’s initiative to simplify its business structure, which will sharpen focus on core
retail business. We maintain CY14E target EV/sales multiple of 0.8x (PRIL is operating at low
profitability thus usage of P/E or EV/EBITDA is not justified). However due to higher than
expected capex in CY12 our net debt has increased leading to reduction in target price to
INR242 (INR259). At CMP, the stock is trading at 0.78x CY13E and 0.73x CY14E EV/sales.
Maintain ‘HOLD/Sector Underperformer’
Chart 1: Lifestyle and value SSG recovers; slowdown continues in home retail
57.0
25.0
(%)
18.0
11.0
4.0
(3.0)
Value retailing
Lifestyle retailing
Q6FY12
Q5FY12
Q4FY12
Q3FY12
Q2FY12
Q1FY12
Q4FY11
Q3FY11
Q2FY11
Q1FY11
Q4 FY10
Q3FY10
Q2FY10
Q1FY10
(10.0)
Home retailing
Source: Company, Edelweiss research
2
Edelweiss Securities Limited
Pantaloon Retail
Chart 2: EBITDA margin down 26bps YoY
12.0
9.6
(%)
7.2
4.8
Q6FY12
Q5FY12
Q4FY12
Q3FY12
Q2FY12
Q1FY12
Q4FY11
Q3FY11
Q2FY11
Q1FY11
Q4FY10
Q3FY10
Q2FY10
0.0
Q1FY10
2.4
Source: Company, Edelweiss research
Table 1: Presence across formats
Format (No. of stores)
Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q3FY12 Q4FY12 Q5FY12 Q6FY12
Pantaloons
53
54
59
59
64
65
65
65
65
67
BB & FB
197
204
205
198
204
204
204
208
204
204
Central & Brand factory
29
30
32
35
38
37
37
41
42
46
eZone
43
44
42
36
36
33
33
40
36
38
Home Town
11
12
11
14
15
17
17
17
14
14
Source: Company, Edelweiss research
Table 2: Retail space: Net addition in Dec quarter disappoints
Format (sq ft area in mn)
Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q3FY12 Q4FY12 Q5FY12 Q6FY12
Pantaloons
1.45
1.50
1.74
1.78
1.94
1.97
1.97
1.94
1.95
1.99
BB & FB
7.86
8.14
8.19
8.12
8.36
8.46
8.46
8.56
8.43
8.36
Central & Brand factory
2.36
2.52
2.76
2.77
2.97
2.88
2.88
3.16
3.19
3.28
eZone
0.53
0.54
0.47
0.43
0.42
0.38
0.38
0.40
0.37
0.38
Home Town
1.11
1.17
1.03
1.24
1.24
1.28
1.28
1.25
1.23
1.20
Source: Company, Edelweiss research
3
Edelweiss Securities Limited
Retail
Financial snapshot
Year to December
Net revenues
Raw material costs
Staff costs
Rent and lease expenses
Other expenses
EBITDA
Depreciation
EBIT
Other income
PBIT
Interest
Profit before tax
Tax
Core profit
Diluted EPS (INR)
Q4FY12
31,708
21,975
1,235
2,425
3,294
2,780
1,214
1,566
69
1,635
1,567
68
22
45
0.2
Q4FY11
28,933
20,441
1,279
1,972
2,630
2,612
877
1,735
40
1,775
1,582
193
58
135
0.6
As % of net revenues
Raw material
Employee cost
Rent and lease expenses
Other expenditure
Total expenses
EBITDA
PBT
Core profit
69.3
3.9
7.6
10.4
91.2
8.8
0.2
0.1
70.6
4.4
6.8
9.1
91.0
9.0
0.7
0.5
% change
9.6
7.5
(3.4)
23.0
25.3
6.4
38.4
(9.7)
71.4
(7.9)
(0.9)
(64.9)
(61.5)
(66.4)
(66.4)
Q3FY12
30,600
21,533
1,238
2,316
2,866
2,647
975
1,673
132
1,805
1,761
44
14
29
0.1
70.4
4.0
7.6
9.4
91.3
8.7
0.1
0.1
% change
3.6
2.1
(0.2)
4.7
14.9
5.0
24.6
(6.4)
(47.8)
(9.4)
(11.0)
54.2
54.2
54.2
54.2
CY12
180,239
126,978
7,660
13,157
16,312
16,131
5,680
10,452
333
10,785
9,857
928
308
620
2.9
CY13E
115,662
81,542
4,916
8,212
10,352
10,641
3,169
7,472
343
7,815
5,705
2,109
700
1,409
6.5
(INR mn)
CY14E
128,342
90,481
5,455
9,112
11,422
11,872
3,179
8,693
227
8,920
5,990
2,930
973
1,957
9.0
70.5
4.3
7.3
9.1
91.0
8.9
0.5
0.3
70.5
4.3
7.1
8.9
90.8
9.2
1.8
1.2
70.5
4.3
7.1
8.9
90.8
9.3
2.3
1.5
Nos represent core retail business (PRIL+ FVRL); CY12 includes 18months performance
4
Edelweiss Securities Limited
Pantaloon Retail
Company Description
PRIL is a leading Indian retail company with presence across most sectors of organized retail.
The company, entered modern retail in 1997 with the opening of its department store
format Pantaloons. In 2001, PRIL launched Big Bazaar, a hypermarket chain, followed by
Food Bazaar, a supermarket chain. A five format company, two years back, it now operates
over 20 formats which include Central (seamless malls located in city centers), Collection I
(home improvement products), Depot (books, music, gifts and stationeries), aLL (fashion
apparel for plus-size individuals), Shoe Factory (footwear), and Blue Sky (fashion
accessories).
Investment Theme
The Indian retail landscape is evolving with interplay of several demographic and economic
factors. Despite the slowdown expected in real GDP growth in the near term, the long term
prospects backed by changing consumer behaviour in favour of larger discretionary spend,
has set the stage for a healthy growth in the retail space over the next five years. The big
opportunity lies in the growing share of organised retail with the growing trend among
consumers to allocate a larger share of income to consumption and gradual improvement in
lifestyle.
We continue to remain optimistic about PRIL’s strong presence across multiple consumption
categories and its size. However, burgeoning debt and higher inventory days remain key
concerns and continues to deteriorate.
Key Risk
Rising share of debt
Going forward, the company will have to depend primarily on debt for funding growth.
Steep increase in cost of borrowing can impact the profitability of the company.
Slow revenue growth due to rollout delays and poor same store growth
A large number of retailers are facing delays in roll outs due to delays by developers. This is
a significant risk and can lead to cost overruns. The delays on account of other retailers
could also impact PRIL as malls will not be viable unless all tenants are tied in. The
company’s same store sales as a whole have been falling steadily due to rising competition.
Continued sharp decline in the same in the future will be a risk to the company’s growth.
Pressure on margins due to competition
With increasing competition, catchment areas are shrinking and the PSFPAs are not scaling
up as expected. Coupled with this, the shortage of quality retail space leading to spiraling
rentals, underdeveloped supply chain, and rising employee costs, which could add to the
cost and impact the company’s margins.
Macro slowdown
Macro concerns could hamper domestic consumption trends and result in lower footfalls.
5
Edelweiss Securities Limited
Retail
Financial Statements
Key Assumptions
Year to December
Income statement
FY11
CY12 CY13E CY14E
FY11
CY12
CY13E
CY14E
Net revenue
Materials costs
110,123
79,010
180,239
126,978
115,662
81,542
128,342
90,481
Employee costs
4,883
7,660
4,916
5,455
Electricity expenses
1,831
3,154
2,082
2,374
Rent and lease expenses
7,474
13,157
8,212
9,112
Company
Advertisement & sales costs
2,485
4,145
2,602
2,888
Revenue growth (Y-o-Y %)
Other Expenses
4,840
9,012
5,667
6,160
16,131
10,641
11,872
Macro
GDP(Y-o-Y %)
Inflation (Avg)
8.4
9.9
6.5
8.8
5.5
7.8
6.5
6.0
Repo rate (exit rate)
6.8
8.5
7.5
6.8
45.6
47.9
54.5
54.0
USD/INR (Avg)
Growth (Value)
Growth (Lifestyle)
No. of stores - Big Bazaar
Year to December
(INR mn)
31.3
95.6 (40.4)
10.7
EBITDA
9,600
12.0
29.1 (22.2)
11.4
Depreciation & Amortization
2,675
5,680
3,169
3,179
EBIT
6,925
10,452
7,472
8,693
208
333
343
227
149.0 161.0 167.0 178.0
No. of stores - Food Bazaar
56.0
43.0
47.0
53.0
Other income
No. of stores - Others (Value)
63.0
32.0
40.0
50.0
Interest expenses
4,288
9,857
5,705
5,990
No. of stores - Pantaloons
59.0
67.0
75.0
83.0
Profit before tax
2,845
928
2,109
2,930
No. of stores - Central and Brand Factory
42.0
46.0
44.0
48.0
Provision for tax
948
308
700
973
No. of stores - eZone
32.0
38.0
35.0
33.0
Net profit
1,897
620
1,409
1,957
12.0
14.0
14.0
16.0
Reported profit
No. of stores - Hometown
No. of stores - Others (Lifestyle)
130.0 152.0 160.0 175.0
1,897
620
1,409
1,957
Shares outstanding (mn)
217
217
217
217
Retail Space (mn sq. ft) - Big Bazaar
7.6
7.9
8.7
9.2
Diluted EPS (INR)
8.7
2.9
6.5
9.0
Retail Space (mn sq. ft) - Food Bazaar
0.6
0.5
0.4
0.5
Dividend per share (INR)
0.9
0.3
0.7
1.0
Retail Space (mn sq. ft) - Pantaloons
1.7
2.0
2.0
2.2
Retail Space (mn sq. ft) - Central and Brand
2.6
3.3
4.2
4.6
Common size metrics
Retail Space (mn sq. ft) - eZone
0.5
0.4
0.4
0.4
Year to December
FY11
CY12
CY13E
CY14E
Retail Space (mn sq. ft) - Hometown
1.2
1.2
1.4
1.6
Electricity expenses
Rent and lease expenses
1.7
6.7
1.8
7.3
1.8
7.1
1.9
7.1
EBITDA margin assumptions
COGS as % of sales
71.7
70.5
70.5
70.5
71.7
70.5
70.5
70.5
Staff costs as % of sales
4.4
4.3
4.3
4.3
Advertising & sales costs
2.3
2.3
2.3
2.3
A&P as % of sales
2.3
2.3
2.3
2.3
Interest expenditure
3.9
5.5
4.9
4.7
Electricity expenses as % of sales
1.7
1.8
1.8
1.9
EBITDA margins
8.7
8.9
9.2
9.3
Rent and lease expenses as % of sales
6.8
7.3
7.1
7.1
EBIT margins
6.3
5.8
6.5
6.8
33.3
33.2
33.2
33.2
Net profit margins
1.7
0.3
1.2
1.5
8.7
8.9
9.2
Tax rate (%)
Materials costs
Financial assumptions
9.3
Growth ratios (%)
Capex (INR mn)
9,392 15,055 (6,384) 7,750
Year to December
FY11
CY12
CY13E
CY14E
Interest payments
4,288 9,857 5,705 5,990
23.4
17.2
63.7
68.0
(35.8)
(34.0)
11.0
11.6
EBITDA margin
Debtor days
Inventory days
15
14
14
14
Revenues
EBITDA
Net profit
(22.0)
(67.3)
127.3
38.9
EPS
(25.9)
(67.3)
127.3
38.9
102
111
110
108
Payable days
84
84
84
84
Cash conversion cycle (days)
33
41
40
38
Interest rate on o/standing debt (%)
7.0
11.4
12.2
11.8
Depreciation as % of gross block
7.5
11.8
6.0
5.9
10.7
11.0
11.0
11.0
Dividend as % of net profit
Debt
78,461 86,461 46,763 50,763
6
Edelweiss Securities Limited
Pantaloon Retail
Balance sheet
(INR mn)
Cash flow metrics
FY11
CY12
CY13E
CY14E
Year to December
FY11
CY12
CY13E
CY14E
Equity capital
Reserves & surplus
1,818
29,602
1,818
30,142
1,834
43,753
1,834
45,458
Operating cash flow
Investing cash flow
(10,873)
(16,687)
12,211
(15,055)
26,472
16,784
10,157
(7,750)
Shareholders funds
31,420
31,960
45,587
47,292
Financing cash flow
30,216
(1,936)
(43,585)
(2,242)
3,313
3,313
2,013
2,013
2,656
(4,779)
(329)
165
Secured loans
55,397
38,908
21,044
22,844
Capex
(15,055)
(15,055)
6,384
(7,750)
Unsecured loans
23,065
47,554
25,720
27,920
Dividends paid
(255)
(80)
(181)
(252)
Borrowings
78,461
86,461
46,763
50,763
Share issuance/(buyback)
-
-
16
-
1,555
1,555
1,555
1,555
As on 31st December
Minority interest (BS)
Deferred tax liability
Sources of funds
114,749
123,289
95,918
101,623
Gross block
Depreciation
40,260
6,787
55,760
12,467
49,876
15,636
57,876
18,814
Net block
33,473
43,294
34,241
39,062
Capital work in progress
Investments
Cash and equivalents
Inventories
Net cash flow
Profitability & efficiency ratios
Year to December
FY11
CY12
CY13E
CY14E
ROAE (%)
ROACE (%)
6.3
8.2
2.0
9.9
3.6
7.7
4.2
10.1
3,446
3,000
2,500
2,250
Inventory day
102
111
110
108
12,967
12,967
12,967
12,967
Debtors days
15
14
14
14
5,520
741
412
576
Payable days
84
84
84
84
Cash conversion cycle (days)
33
41
40
38
36,791
44,459
34,857
37,975
5,298
5,487
4,436
4,923
Current ratio
3.3
3.0
2.8
2.7
Loans and advances
45,275
45,275
31,975
31,975
Debt/EBITDA
8.2
5.4
4.4
4.3
Other current assets
402
402
402
402
Debt/Equity
2.5
2.7
1.0
1.1
Total current assets
93,287
96,364
72,082
75,851
Adjusted debt/equity
2.5
2.7
1.0
1.1
Sundry creditors and others
26,721
30,633
24,169
26,804
Interest coverage
1.6
1.1
1.3
1.5
1,702
1,702
1,702
1,702
Total current liabilities &
28,424
32,336
25,871
28,506
Operating ratios
Net current assets
64,863
64,028
46,210
47,344
Year to December
114,749
123,289
95,918
101,623
144.7
147.2
210.0
217.8
Sundry debtors
Provisions
Uses of funds
Book value per share (INR)
Free cash flow
FY11
CY12
CY13E
CY14E
Total asset turnover
Fixed asset turnover
1.2
3.7
1.5
4.7
1.1
3.0
1.3
3.5
Equity turnover
3.7
5.7
3.0
2.8
(INR mn)
Year to December
FY11
CY12
CY13E
CY14E
Valuation parameters
Net profit
Add : Non cash charge
1,897
6,964
620
15,536
1,409
8,874
1,957
9,169
Year to December
FY11
CY12
CY13E
CY14E
Depreciation
2,675
5,680
3,169
3,179
Diluted EPS (INR)
Y-o-Y growth (%)
8.7
(25.9)
2.9
(67.3)
6.5
127.3
9.0
38.9
Others
4,288
9,857
5,705
5,990
CEPS (INR)
21.1
29.0
21.1
23.7
Gross cash flow
8,860
16,156
10,283
11,126
Diluted PE (x)
22.9
69.9
30.8
22.1
Less: Changes in WC
6,248
3,945
(16,189)
970
Price/BV (x)
1.4
1.4
1.0
0.9
Operating cash flow
2,612
12,211
26,472
10,157
EV/Sales (x)
1.1
0.7
0.8
0.7
Less: Capex
9,392
15,055
(6,384)
7,750
(6,780)
(2,843)
32,856
2,407
12.1
0.5
8.0
0.2
8.4
0.3
7.9
0.5
Free cash flow
EV/EBITDA (x)
Dividend yield (%)
Nos represent core retail business (PRIL+ FVRL); CY12 includes 18months performance
Peer comparison valuation
Market cap
(USD mn)
Name
Pantaloon Retail
Jubilant Foodworks
EV/EBITDA (X)
FY13E
FY14E
EV/Sales (X)
FY13E
FY14E
ROAE (%)
FY13E
FY14E
837
1,297
8.4
27.8
7.9
20.2
0.8
5.1
0.7
3.7
3.6
38.5
638
65.7
26.3
1.2
1.0
(5.1)
9.7
4,102
20.7
16.7
2.2
1.8
42.2
38.9
Median
24.2
18.5
1.7
1.4
21.1
23.1
AVERAGE
30.4
17.6
2.3
1.8
19.8
22.3
Shoppers Stop
Titan Industries
4.2
36.4
Source: Edelweiss research
7
Edelweiss Securities Limited
Retail
Additional Data
Directors Data
Mr. Kishore Biyani
Mr. Rakesh Biyani
Dr. Darlie Koshy
Mrs. Bala Deshpande
Mr. Vijay Kumar Chopra
Mr. Kailash Bhatia
Managing Director, Executive Promoter
Executive Promoter
Independent Non executive
Independent Non executive
Independent Non executive
Executive Director
Mr. Gopikishan Biyani
Mr. Shailesh Haribhakti
Mr. S. Doreswamy
Mr. Anil Harish
Mr. Vijay Biyani
Non executive Promoter
Chairman, Independent Non executive
Independent Non executive
Independent Non executive
Executive Promoter
Auditors - M/s. NGS & Co.
*as per last annual report
Holding – Top10
Perc. Holding
12.49
4.27
3.20
1.24
1.20
Bennett Coleman & Co Ltd
MKCP Institutionl Investor
DSP Blackrock Investment Manager
Life Insurance Corp Of India
SBI Fund Management
Perc. Holding
9.34
3.78
2.22
1.21
1.14
Arisaig Partners Asia Pte Ltd
IDBI Trusteeship Svs Ltd
Macquarie Bank Limited
Copthall Mauritius Inv Ltd
Birla Sun Life Asset Management
*as per last available data
Bulk Deals
Data
26 Mar 2012
28 Mar 2012
30 Mar 2012
03 Apr 2012
18 May 2012
22 Jan 2013
22 Jan 2013
22 Jan 2013
Acquired / Seller
Macquarie Bank Ltd
Macquarie Bank Ltd
Macquarie Bank Ltd
Macquarie Bank Ltd
Arisaig India Fund Ltd
Morgan Stanley Asia (Singapore) Pte
Kotak Securities Ltd.
Goldman Sachs Investments Mauritius I Ltd
B/S
Sell
Sell
Sell
Sell
Buy
Buy
Sell
Buy
Qty Traded
2200000
2200000
2200000
2200000
1422936
2305000
1430000
2870343
Price
156.95
153.95
160.00
169.95
143.27
262.17
264.28
263.30
*in last one year
Insider Trades
Reporting Data
10 May 2012
25 May 2012
25 May 2012
28 May 2012
Acquired / Seller
Arisaig Partners (Asia) Pte. Ltd.
PIL Industries Ltd
Future Corporate Resources Ltd
Future Corporate Resources
B/S
Buy
Buy
Buy
Sell
Qty Traded
4371786
225876
200000
180955
*in last one year
8
Edelweiss Securities Limited
RATING & INTERPRETATION
Company
Jubilant Foodworks
Shoppers Stop
Absolute
Relative
Relative
reco
reco
risk
HOLD
SP
M
BUY
SP
L
Company
Absolute
Relative
Relative
reco
reco
Risk
Pantaloon Retail
HOLD
SU
H
Titan Industries
BUY
SO
L
ABSOLUTE RATING
Ratings
Expected absolute returns over 12 months
Buy
More than 15%
Hold
Between 15% and - 5%
Reduce
Less than -5%
RELATIVE RETURNS RATING
Ratings
Criteria
Sector Outperformer (SO)
Stock return > 1.25 x Sector return
Sector Performer (SP)
Stock return > 0.75 x Sector return
Stock return < 1.25 x Sector return
Sector Underperformer (SU)
Stock return < 0.75 x Sector return
Sector return is market cap weighted average return for the coverage universe
within the sector
RELATIVE RISK RATING
Ratings
Criteria
Low (L)
Bottom 1/3rd percentile in the sector
Medium (M)
Middle 1/3rd percentile in the sector
High (H)
Top 1/3rd percentile in the sector
Risk ratings are based on Edelweiss risk model
SECTOR RATING
Ratings
Criteria
Overweight (OW)
Sector return > 1.25 x Nifty return
Equalweight (EW)
Sector return > 0.75 x Nifty return
Sector return < 1.25 x Nifty return
Underweight (UW)
Sector return < 0.75 x Nifty return
9
Edelweiss Securities Limited
Retail
Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.
Board: (91-22) 4009 4400, Email: [email protected]
Vikas Khemani
Head Institutional Equities
[email protected]
+91 22 2286 4206
Nischal Maheshwari
Co-Head Institutional Equities & Head Research
[email protected]
+91 22 4063 5476
Nirav Sheth
Head Sales
[email protected]
+91 22 4040 7499
Coverage group(s) of stocks by primary analyst(s): Retail
Jubilant Foodworks, Pantaloon Retail, Shoppers Stop, Titan Industries
Recent Research
Date
Company
Title
Price (INR)
Recos
04-Feb-13
Jubilant
Foodworks
SSG slows as expected; store
expansions on track;
Result Update
1,136
Hold
01-Feb-13
Shoppers
Stop
Departmental sales surge;
Hypercity the Achilles’ heel;
Result Update
441
Buy
30-Jan-13
Titan
Industries
Shining on festive glitter;
Result Update
276
Buy
Distribution of Ratings / Market Cap
Rating Interpretation
Edelweiss Research Coverage Universe
Rating Distribution*
* - stocks under review
> 50bn
Market Cap (INR)
118
Buy
Hold
120
49
Reduce
Total
17
186
Between 10bn and 50 bn
< 10bn
56
Rating
Expected to
Buy
appreciate more than 15% over a 12-month period
Hold
appreciate up to 15% over a 12-month period
Reduce
depreciate more than 5% over a 12-month period
12
10
Edelweiss Securities Limited
Pantaloon Retail
DISCLAIMER
Disclaimer:
This document has been prepared by Edelweiss Securities Limited (Edelweiss). Edelweiss, its holding company and associate companies are a full service, integrated investment
banking, portfolio management and brokerage group. Our research analysts and sales persons provide important input into our investment banking activities. This document
does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein
is from publicly available data or other sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied on as such. Edelweiss
or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information
contained in this report. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The user
assumes the entire risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arrive at an independent
evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his own advisors to
determine the merits and risks of such investment. The investment discussed or views expressed may not be suitable for all investors. We and our affiliates, group companies,
officers, directors, and employees may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be
engaged in any other transaction involving such securities and earn brokerage or other compensation or act as advisor or lender/borrower to such company (ies) or have other
potential conflict of interest with respect to any recommendation and related information and opinions. This information is strictly confidential and is being furnished to you
solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied,
in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any
locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Edelweiss and
affiliates/ group companies to any registration or licensing requirements within such jurisdiction. The distribution of this document in certain jurisdictions may be restricted by
law, and persons in whose possession this document comes, should inform themselves about and observe, any such restrictions. The information given in this document is as of
the date of this report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without any
prior notice. Edelweiss reserves the right to make modifications and alterations to this statement as may be required from time to time. However, Edelweiss is under no
obligation to update or keep the information current. Nevertheless, Edelweiss is committed to providing independent and transparent recommendation to its client and would
be happy to provide any information in response to specific client queries. Neither Edelweiss nor any of its affiliates, group companies, directors, employees, agents or
representatives shall be liable for any damages whether direct, indirect, special or consequential including lost revenue or lost profits that may arise from or in connection with
the use of the information. Past performance is not necessarily a guide to future performance. The disclosures of interest statements incorporated in this document are
provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. Edelweiss Securities Limited generally prohibits its
analysts, persons reporting to analysts and their dependents from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The
information provided in these reports remains, unless otherwise stated, the copyright of Edelweiss. All layout, design, original artwork, concepts and other Intellectual
Properties, remains the property and copyright Edelweiss and may not be used in any form or for any purpose whatsoever by any party without the express written permission
of the copyright holders.
Analyst Certification:
The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or
their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.
Analyst holding in the stock: No.
Additional Disclaimer for U.S. Persons
This research report is a product of Edelweiss Securities Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s)
preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s)
is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with
U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.
This report is intended for distribution by Edelweiss Securities Limited only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange
Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a
Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated
and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor.
In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with
Major Institutional Investors, Edelweiss Securities Limited has entered into an agreement with a U.S. registered broker-dealer, Enclave Capital, LLC ("Enclave").
Transactions in securities discussed in this research report should be effected through Enclave or another U.S. registered broker dealer.
Additional Disclaimer for U.K. Persons
The contents of this research report have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA").
In the United Kingdom, this research report is being distributed only to and is directed only at (a) persons who have professional experience in matters relating to investments
falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the “Order”); (b) persons falling within Article 49(2)(a) to (d) of the Order (including high net worth
companies and unincorporated associations); and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as
“relevant persons”).
This research report must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this research report relates is
available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this research report nor
any of its contents. This research report must not be distributed, published, reproduced or disclosed (in whole or in part) by recipients to any other person.
Edelweiss shall not be liable for any delay or any other interruption which may occur in presenting the data due to any reason including network (Internet) reasons or snags in
the system, break down of the system or any other equipment, server breakdown, maintenance shutdown, breakdown of communication services or inability of the Edelweiss
to present the data. In no event shall the Edelweiss be liable for any damages, including without limitation direct or indirect, special, incidental, or consequential damages,
losses or expenses arising in connection with the data presented by the Edelweiss through this report.
Copyright 2009 Edelweiss Research (Edelweiss Securities Ltd). All rights reserved
Access the entire repository of Edelweiss Research on www.edelresearch.com
11
Edelweiss Securities Limited