Pantaloon Retail - Targetting 100% growth y-o-y.
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Emerging companies - Mid caps that can become large cap
Forum Discription: These are companies operating in growing markets having have certain niches or specific attributes like new sector plays. These are emerging multibaggers with high risks and high rewards.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=135
Printed Date: 23/Apr/2024 at 12:06pm
Topic: Pantaloon Retail - Targetting 100% growth y-o-y.
Posted By: basant
Subject: Pantaloon Retail - Targetting 100% growth y-o-y.
Date Posted: 10/Aug/2006 at 3:40pm
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Pantaloon Retail – Relying on growth I had written about Pantaloon Retail on this forum under the topic http://www.theequitydesk.com/forum/forum_posts.asp?TID=75 - The Multibagger Portfolio when it was at Rs 1125. Personally I continue to hold the stock for the past 3 years when it used to quote at Rs 50.. The company recently came out with its sales number for July 2006 and the growth seems to continue unabated. The company hopes to grow its total area by 10 times to 30 million square feet by 2010 from the current 3.5 million square feet. Sales are also expected to grow on the same line. Pantaloon Retail has maintained its aggressive growth stance for the month of July 2006.
Recommendation: Pantaloon Retail remains a high risk high return stocks. Price wise if sales and profits grow multifold the stock price has to follow. While the stock might look cheap the RoE at 25% implies that the company is managing its capital well. The company’s foray into restaurants, Insurance, real estates spas, etc should help it continue with its growth unabated. In September the company is setting up 5 Big bazaars, 11 Food Bazaars and 8 Home store format stores. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Replies:
Posted By: prashantmohta
Date Posted: 10/Aug/2006 at 12:23pm
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Pantaloon emerges as clear winner.it is ahead of the pack in acquiring the real estate in big and small cities.well the management has very aggressive plans for the coming years.the biggest risk for pantaloon from HR perspective will be the timing of entry of foreign retailers but kishore biyani has already said that if walmarts come ,he will not be happy below 300% premium giving to them.pantaloon sales target in 2010 is 30000 cr.seems to be challenging. prashantmohta,------------- |
Posted By: Ajith
Date Posted: 11/Aug/2006 at 3:47pm
| There is bound to be heavy competition among many players by 2011.Strong regeonal players may emerge who are very focussed and these may go national later after leaning the tricks of the trade. Capital requirements will be large if you really want to go national and at present only Reliance Retail is comfortable.Pantaloon has the first mover advantage.Trent may surprise-LANDMARK is a hidden gem very popular in Chennai as I noted when I was there yesterday.In any case,the winners after 6 years will be rewarded with a high market cap/PE. |
Posted By: prashantmohta
Date Posted: 18/Aug/2006 at 11:06am
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pantaloon has announced that they will raise funds for expansion,well m.r. basant i would like to request you to show some lights to this context .they want to raise 3600 cr.by 2010,will it be possible for the co. to raise such amount as they cannot do placement as fii limit is already filled. sure they will have to come again and again with the right issues,will the co.s eps will be affected by equity dilution .co. has promissed to deliver 100% in sales but effectively growth in eps will not be same as sales growth because of equity dilution.
prashantmohta.
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Posted By: basant
Date Posted: 19/Aug/2006 at 12:17pm
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You have raised an important point. People should be more concerned with EPS growth rather then sales growth. Mostly all of us take it as equal whereas it is not. For companies that wish to grow at more then their RoE they can do so by only two options: 1) Take debt 2) Raise equity. As shareholders of companies that are growing at more then the RoE we need to understand that a 80% plus growth is not possible unless the company goes in for a lot of debt (which is dangerous) or frequently dilutes equity. Normally since companies can raise debt at 11% the incremental RoCE should add to the bottom line but this strategy can cut you both ways. I would not be much worried for an equity dilution as long as it happens through a Rights issue. But placements/ GDR dilute the shareholder's advantage. But my sense is that pantaloon would do a stake sale in any of its subsidiaries combined with a mix of debt and equity. For a company at a market cap of Rs 4000 crores it would be a tall order to raise Rs 3600 crore through equity alone. Pantaloon needs about Rs 1800 crores for Working capital and another rs 1800 crore for long term expansion plans Working capital needs are normally financed at 25% margin. That needs they need Rs 450 crores from here Long term expansion funds can be distributed as 1.5:1 on debt equity that is they need Rs 720 crores as equity. So the company needs about Rs 1170 crores (Rs 450 crores + Rs 720 crores) and not Rs 3600 crores as some people would suggest. Out of this they could sell of some stake in their home business etc and try to add up some amount from internal accruals. All said and done Pantaloon remains a very high risk high reward investment. Either you can lose 50 % of your capital from here or make at least 8 to 10 times the money. Sales in 2010 are expected to be 15 times of sales in 2006. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 19/Aug/2006 at 9:14pm
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The company shall also make a huge AMC fees from its real estate innitiative Ksh*tij. By 2010 it plans to have a total of 40 million square feet under its real estate arm and 30 milkion square feet under its retailing ventures., The total is a staggering 70 million square feet.While Ksh*tij shall own and develop land the AMC fees shall be a fixed percentage plus profit sharing over a hurdle rate. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: prashantmohta
Date Posted: 19/Aug/2006 at 10:48pm
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Three years ago i went to mumbai and asked analysts about indian retail story ,i found everybody is not very positive here in india inspite of big gurus had made huge money in retail stocks keeping for more than 20 years.and especially for pantaloon one of the popular name in ithe indian stock market (RSD) was negative for this co.everybody was worried for the management and for the net margin pressure.but if you go to walmarts site ,they are working with 5.5% margin and has not gained 10% market share now in the developed US market. i am holding this stock and as far as the concerns over the management that they will deliver or not for their bumpy sales figure for 2010 is a different issue.what i can understand that co.is has well diversified its businessess thru (home solution,big bazar,food bazar etc).so those who doubts here must give second look.prashantmohta.
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Posted By: basant
Date Posted: 19/Aug/2006 at 11:38pm
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That is what makes a market. Your biggest gains come in the stocks no one believs in. There is another logic to it. If everybody buys the stock with you there would be no body to buy it at a higher price and there would simmultaneously be a lot of sellers.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 23/Aug/2006 at 12:17pm
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There are very strong rumours that Pantaloon may sell a part of its stake in its Home Town and other ventures. The company intends to use this money to fund its expansion plans.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 26/Aug/2006 at 5:55pm
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Pantaloon Retail - Dissecting the numbers
The recent news about pantaloons intending to raise about Rs 960 crores carries some very hidden numbers. I have attempted to decipher and analyse them.
Pantaloons intends to place upto 24% of its stake in the subsidiaries to a group of Private equity/ Venture capitalists.The valuations assigned are:
WHile Home solutions is held 33% by Unitech the other companies are owed by Pantaloons. These work out to Rs 940 per share.
If we deduct Rs 940 from the current market price (Rs 1635) of Pantaloons we are getting the remaining businesses for Rs 735 per share or a market cap of Rs 1911 crores.
This compares very well with http://www.theequitydesk.com/forum/forum_posts.asp?TID=103 - Trent which has finally started aggressive expansion and trades at a mrket cap of Rs 1120 crores or Shopper Stop which trades at a market cap of Rs 1675 crores.
The resultant value of Pantaloons + Big Bazaar + Food Bazaar does almost two times the sales of Trent and Shopper Stop combined and is valued at only 45% of the combined value of the two entities. there could be three reasons for this:
1) The market is already pricing in an execution risk in Pantaloons growth startegy
2) Pantaloon has some debt while Trent and Shopper stop are relatively lesser debt. Trent is cash positive really.
3) Pantaloons derives about half of its sale from Big Bazaar and Food Bazaar which are low margin businesses.
How ever the following points that the markets seem to be missing should also be noted
1) Pantaloon grows at twice the rate of growth of Shoppers stop and Trent - SO valuations should be significantly higher.
2) the contribution to sales of the businesses tio be hived off during Fy 06 was less then 25% of total sales.And it came from a mix of low and high margin items as well.
3) Now putting the same logic if 25% of Pantaloons revenue generating business was sold off at Rs 940 per share then the total business should be valued at four times Rs 940.
The stake sale of subsidiaries being done to ICICI ventures and other smart Private equity/VC's as always unlisted businesses always carry lower valuations.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: reema
Date Posted: 26/Aug/2006 at 10:42pm
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FII cannot buy the share as it has hit the cap maybe that is why you are getting it at cheap. ------------- You should try to add wealth not multiply it |
Posted By: kmahd
Date Posted: 27/Aug/2006 at 7:53pm
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Basantji
I am really fascinated by your analysis on this board. Could you please comment on the following article ?
http://www.equitymaster.com/detail.asp?date=8/23/2006&story=3 - http://www.equitymaster.com/detail.asp?date=8/23/2006&story=3
The execution risks seem real to me. Pantaloon did have early mover advantages before but it could find it tough going forward.
Regards,
KM
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Posted By: basant
Date Posted: 27/Aug/2006 at 8:34pm
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Hi, That was a good view while I cannot disagree with the concerns the call that investors should take is very simple" Are you willing to believe in Biyani and his team". Now I would give you two such instances in the past a) When reliance Infocom was launched Bharti traded at Rs 45 and quickly went down to Rs 20. It has come up 20 times from there At that time the market feared that Sunil Mittal would not be able to match up to Reliance. So it was very well discounted in the price. At about the same time Pantaloon traded at Rs 50 and the concerns were very very similar. Nobody thought that Biyani could execute his plans. But on the flip side the risk reward was in your favor and it is up 35 times from there. I have a http://www.theequitydesk.com/forum/forum_posts.asp?TID=177 - very different investing strategy . I like to take broad macro calls and then look for the leaders in that industry and also look at the risk reward ratio. Now coming back to that article there are a few things which come to mind 1) The PE's are trailing and that is why they look so fearful 2) In a new sector there will always be execution risks. That is why a new sector throws up multibaggers.
3) Markets get affected by unknowns. At the current price and with an open discussion I feel all executions risks are factored into the price.
4) It is far easier for a Rs 500 crore company to close down then it is
for a Rs 4000 crore company. Pantaloon did a sale of Rs 500 crores in 2003 and it should do about Rs 4000 crore in 2007
5) If Pantaloon falters then the stock could come down to Rs 800 because at that price it would have a market cap of Rs 2000 crores. If it manages to pull itself out it could be up multifold.
6) Retailing will survive so you should hedge your bets with
7) Globally the Private equity players have been smarter then the fund managers and the proposed placement to a group of private equity players would mean that due diligence has been conducted.
8)If you can’t get a plan right with a team like this(see section at the bottom) then .....Most of these guys would not like to continue working in a company that cannot survive and mind you theya re very very smart people. You could argue that most of them could leave but till date only one senior person “Raghu Pillai” has left Pantaloon for reliance.Also reliance will also have a team of dedicated people working so it is the HR function that is more important rather then Biyani or Reliance.
9) Finally I do not think that we wil see a K-Mart in India before 2010 unless some one does something very stupid.In case a company wants to sell there will be plenty of buyers at a price. Remember how landmark was scooped up by Trent.So the losses on the downside is about what percentage of your investment you could lose rather the losing all your capital.
10) If you have seen the block deal segment Intra FII trades are donme at a premium of 10% - 20% to the market price.
11) Finally Pantaloon is for the very aggressive investor who knows his risks.
Source Pantaloon website ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 27/Aug/2006 at 8:42am
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I have tried to highlight only on the execution side of the project since that is the real risk everything else is a derivative of that. Pantaloon trades at a PE of 30 times Fy 07 and 18 times Fy 08, with an RoE of 25%.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: kmahd
Date Posted: 27/Aug/2006 at 11:52am
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Thank you Basantji,
I am convinced. Also it makes sense to buy the top 2-3 companies in a growth secor as there is space for all to grow.
What is your view on Pyramid. Could it be a good bet considering that it will be a takeover target?
Thanks once gain.
Kalpesh
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Posted By: basant
Date Posted: 28/Aug/2006 at 12:14pm
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Piramid is one stock that i have been looking since it was listed bought it once but then sold it again. Piramid is a late mover and while their stores are doing extraordinarily well in Nagpur ask some one whom you know stays there they have gone wrong with their hub and spoke model (one large store and several smaller ones feeding it)concept and are presently reworking on that.
So if you are in the retail sector before you buy Piramid you should have an exposure to pantaloon and Trent.Once you have taken an exposure to these two then you could consider Piramid because at a market cap of about US $ 50 million you have almost nothing to lose.The management is also quite strong.
Once FDI is opened up global retailors will want to buy the biggest and the largest. Put yourself in Walmart's shoes.You would like to buy Pantaloon not even Trent.In 40 days their cash profit would equal the entire market cap of Pantaloons. And at a price everything can be bought. We all live in a material world.
It is not like the software story where people buy only smaller companies since they are themselves medium scale by global standards. And do not buy a stock on take over news some stocks that investors have held on take over triggers and which have not materialised are
Federal bank
South Indian Bank.
Also with Pantaloon Biyani says that since they are getting into several areas they can also retrace themselves back in case some thing goes wrong in one or two formats. SO in that way several lateral expansio seems to help.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: prashantmohta
Date Posted: 03/Sep/2006 at 9:17pm
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We think PRIL is well-placed to capitalize on the huge growth opportunity in the organized retail space in India. The company not only has first mover advantage, it has also built strong brands under various formats; locked in its real estate at competitive rates; and is creating/monetizing value created in its subsidiaries. In our view, PRIL remains the best way to play the retail story in India. The company expects to spend around US$-850m in capital expenditure, investment in working capital and investments in joint ventures and subsidiaries over the next four years. It estimates to spend around US$-16 per sq ft on fixed assets, around US- per sq ft on working capital and around US$-150m on investments in joint ventures and subsidiaries. The company plans to have around 30m sq ft of retail space under coverage by 2010 and has signed around 24m sq ft already. According to management, recent flooding in certain parts of the country has had no material impact on its operations. The same-store growth is likely to remain strong in August 2006 as the companyfs Big Bazaarfs four-day deal-based promotion around August 15 did very well. Also the companyfs Pantaloon end of season sale was quite successful. The company is guiding for 10-12% same store growth in the lifestyle retailing segment, and around 20% same store growth in its value retailing segment. However, the company is likely to do better than these numbers in F2007. The company is expected to announce its year ending June 2006 performance by end September, and will report consolidated quarterly performance at the latest by F2Q07. Source: Report by Morgan Stanley dated 29 Aug 06. |
Posted By: prashantmohta
Date Posted: 05/Sep/2006 at 10:38pm
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yesterday i saw ticker was running on pantaloon retail in tv channel that co. is going to reach its magical figure in 2010 (Rs 30,000 cr.sales from Rs 2000 cr. sales in 2006) and increase space from 3 million sq.feet to 30 million sq.feet (15 times) in the next 4 years. it appears to be blockbuster company in your website if things go as per Biyani's plan.
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Posted By: omshivaya
Date Posted: 09/Sep/2006 at 10:46pm
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Is going to? Or should be?? Kindly throw some light! And which channel please? Thanks Prash ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 10/Sep/2006 at 11:48am
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Here is an extract of what Kishore Biyani said during the recent Retail Forum:
Biyani says he is unfazed by domestic competition — Reliance’s Rs 25,000 crore plan notwithstanding. He says the country should not allow the the Wal-Marts, Tescos and Carrefours — yet. “They can come later,” he says. “The government shouldn’t let them in now”. Why? “If they are allowed now, they get a cheap entry — they can just buy out Indian companies for about a billion dollars (Rs 4,600 crore). Let them come after a few years, we’ll get at least $5 billion then,” he explains. “I have never told this before. I was a manufacturer of garments. Shoppers’ Stop declined to stock my products in their malls and that’s when I decided to set up my own retail malls,” Biyani said While he is furiously building scale to his retail business, Biyani is also diversifying into allied fields. Into insurance and private equity as he tries to get a bigger share of the customer’s wallet. By next year, he declares Pantaloon’s revenues would double to $2 billion (Rs 9,200 crore). By 2010, Pantaloon they would cross $6 billion (Rs 27,600 crore). “People like us, believe in us and they give us the space. We have enough leased space for the next 3-4 years,” he says. The biggest challenges, Biyani says, come from “managing his business at the speed of change. We are being watched. We Indians are not the perfectionists that managements talk about and we should know which war to fight and which war to avoid.” ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 11/Sep/2006 at 12:24pm
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Wow! Now thats what I call a Global leader. Killer instinct and conviction to take on the big boys globally. I am going to add more Pantaloon to my portfolio. Pantaloon just corrected a bit! I am liking this Biyani guy more day by day. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 11/Sep/2006 at 12:49pm
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Just go slow in adding this stock falls very fast on pretty low volumes so always keep the last rupee in the purse unless you see 1200 on the screen because at that price it would be 20 times Fy 07. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 11/Sep/2006 at 1:12pm
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I have a slight diff. strategy here basant jee. I just cant predict where price will go & so if I feel stock has potential, I buy it despite falls as I feel over the years, it wont matter much! However, I shall keep your point in mind. Will see a price where it is reacting to and then choose an entry. Thanks for your input. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 11/Sep/2006 at 5:10pm
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Nothing technical about that support is at Rs 1100. Over the last 2 years Pantaloon has never fallen 20 times current year PE which is at Rs 1100 as per brokerage reports and Rs 1200 as per my estimates. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 11/Sep/2006 at 9:10pm
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The August sales numbers from Pantaloon were very good. You may have a look at it here:
http://www.pantaloon.com/html/August06%20_Inv_upd.pdf - http://www.pantaloon.com/html/August06%20_Inv_upd.pdf
Normally in retailing the number to look out for is the same store sales growth. In this case it was at 30%+ meaning that even if pantaloon does not open up new stores sales will grow at 30%. This seems a one off to me normally it should be between 18% - 20%. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 11/Sep/2006 at 11:28pm
Ok thanks Basant jee. Hope tomorrow there is another strong downward movement so that I can get in around 1500 for 50%. The rest I think I shall deploy around 1400, if it does go there. Hope so! Thank you again  ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: prosperity
Date Posted: 12/Sep/2006 at 9:07pm
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Basant-ji,
Can you pls. answer me this -
Pantaloons always talks about Sales Growth. Double sales in xyz time, 30% increase in sales YOY...
But i am interested in Profits and not Sales..
As you once said that Sales of TV18 are very very small fraction of Pantaloons, wheres as the Profits of TV18 are not that small fraction of Pantaloons...
Then if i had money - which business looks more "profitable" to me for next 5 years ?
TV18 or Pantaloons ?
- Both are scalable
- Pantaloons needs fresh capex like land, etc to expand - not so much capex is needed for TV18 to open a gujrati business channel or to expand another website with huge potential of daily hits..
- Competion talks highly of TV18 - but not same for Pantaloons .. they have to still see a Reliance Mega Era..
- Pantaloons have GROWN... TV18 is still GROWING..
etc. etc...
Pls. try convincing me - if your points are appealing and convincing - i should get convinced !
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Posted By: kulman
Date Posted: 12/Sep/2006 at 9:13pm
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Prosperity, very good thinking. This is "business" like thinking.
For my money, I would definitely bet on TV18.
I'm waiting for some bad news or some panic** in the market so that I can buy TV18 in my comfort zone.
------------------------------------------------------------------------------------
**(nowadays traders are not building huge leveraged positions in F&O, as they are yet to recover from May'06 carnage, so I may have to wait a little longer!) ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: catchsudipto
Date Posted: 12/Sep/2006 at 11:00am
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Broking house, JP Morgan is bullish on Pantaloon Retail and has maintained an overweight rating with a price target of Rs 2475 on the stock. < ="http://202.87.40.52/promos/sponsor_news.js">JP Morgan report on Pantaloon Retail: "Total sales for August 06 were up 72% y/y and 23% m/m at Rs 2.5 billion. Value retailing sales (64% share) were up 88% y/y while lifestyle retailing grew 50% y/y." "Same Store sales (SSS) growth was healthy for both value retailing at 37% y/y and lifestyle retailing at 33%y/y. Overall SSS growth came in at 35% y/y. This high growth to some extent could be attributed to end of season sales during last month and four days of special promotions around Independence Day." "About 30,000 sq ft of space was added during August 06 taking the overall retail space under coverage to 2.71 mn sq ft. Company targets to add another 0.24 mn sq ft in September 06 and 0.4 mn sq ft in October 06 which will take the total retail space to over 3.3 mn sq ft." "We have an Overweight rating on the stock with June 07 target price of Rs 2475, based on PE multiple of 32x. The stock is currently trading at 34x FY07 and 21x FY08 earnings estimates respectively. We believe the value of strategic initiatives such as Ksh*tij, Indivision and various other JVs is not reflected in the current share price, and these could be the key drivers for the stock. Key risk is any delays in opening new stores and any sharp slowdown in consumer spending.------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 15/Sep/2006 at 12:01pm
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This is a very interesting interview Biyani gave about a fortnight back.
http://www.rediff.com/money/2006/sep/01inter.htm - http://www.rediff.com/money/2006/sep/01inter.htm
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: prosperity
Date Posted: 16/Sep/2006 at 7:31pm
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Basantji,
Can you pls. reply to this one. I am waiting since past many days to get a reply from you. Also have send you a personal message.
Thanks Sir !
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Posted By: basant
Date Posted: 16/Sep/2006 at 7:52pm
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I did not reply since I thought we have discussed the topic in detail with almost all the aspects.Still I am trying to put my ooinion:
1) Company is making profits and should post an EPS of Rs 55- 60 for Fy 07.
2) Capex is not needed to buy land since they take the malls on hire.
3) Margins are low but u cannot compare a retailing co. to a boradcasting one. Different businesses cannot be compared either on the basis of models or EPS For example India bulls has a market cap is 50% more then that of IDBI but we cannot compare the two!
4) The total retail sector is Rs 10, lac crores Pantaloon did a sale of Rs 2000 crs in Fy06 (not yet out officially) Total business news market is not yet defined since there are only two players so cannot think about the grown/ growing concept.
5) Mukesh Ambani is tying up with BBC to get into broadcasting (news and entertainment) once that happens the same concerns will be raised for TV 18 and NDTV.
And about your question of convincing you that is something I would not do because we can only discuss issues and provide opinions finally the call should be independently motivated becaue the risks are significantlly higher in emerging companies and one should be prepared to sell out at lower prices in case there is a shift in fundamentals .
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: prosperity
Date Posted: 16/Sep/2006 at 8:00pm
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Thanks Basantji...
Margins are low (probably in the complete listed retail sector)
And that's what prevents me to be bullish about this stock.
Sales would increase multifold - but profit margins concerns me more than that !
Thanks !
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Posted By: basant
Date Posted: 16/Sep/2006 at 8:08pm
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The global avreage for the net profit is 5.5% whether it is Wal Mart or carrefour etc. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: reetesh
Date Posted: 22/Sep/2006 at 4:08pm
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Insiders are working overtime in Pantaloon Retail, since morning it was Rs. 80 and at 2:30 there is news flash Stock Split. Zoom to Rs.130 gain so easy to make money if you know inside information. ------------- When going gets tough, that’s when tough (people) gets going. |
Posted By: BubbleVision
Date Posted: 22/Sep/2006 at 4:35pm
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Sorry Kulman i wanted to print this first...
With enough inside information and a million of dollars, one can go broke within an year. -- Warren Buffett ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 22/Sep/2006 at 4:41pm
 nice one BubbleVision!!
I appreciate your speed of thought, speed of action.... ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: reetesh
Date Posted: 22/Sep/2006 at 5:18pm
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Good one, there is hardly any example for the same, bubble vision. Although reply was real quick... ------------- When going gets tough, that’s when tough (people) gets going. |
Posted By: catchsudipto
Date Posted: 22/Sep/2006 at 5:19pm
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Dear Sir, Thanks sir. I think u are right. Any idea why pantaloon retail is up with lots of volume . thanks ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 22/Sep/2006 at 5:39pm
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As Reetesh just said the company is splitting its stock now can you tell me why it went down from Rs 2096 to Rs 1090 in 3 months. it is very difficult to assign a reason to each movement in stock price. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 22/Sep/2006 at 5:48pm
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Dear Sir, "it went down from Rs 2096 to Rs 1090 in 3 months" to give poor peoples like me a chance to buy some share in cheap  . Yes its very very difficult to assign an reason for stock movements. Thanks. ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 02/Oct/2006 at 6:06pm
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This is a sneak preview of where Kishor Biyani thinks he could go http://www.pantaloon.com/html/investore_presentation.pdf - http://www.pantaloon.com/html/investore_presentation.pdf
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 02/Oct/2006 at 7:09pm
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Sneak?? You mean is this article not yet publicly known? ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 02/Oct/2006 at 8:14pm
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Broadly it is but the word sneak meant "small" not secret!So may meanings we could have with one english word. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 02/Oct/2006 at 9:55pm
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Oh Allright! Was just clarifying that is all. No hassles sir! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: reetesh
Date Posted: 03/Oct/2006 at 5:47pm
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Hi Sir, Did you like Pantaloon result? ------------- When going gets tough, that’s when tough (people) gets going. |
Posted By: basant
Date Posted: 03/Oct/2006 at 6:05pm
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On a quarterly basis No, because I am yet to see their consolidated results; the margins seemed down a bit but the problem was in the June quarter they were preparing for the aggresive roll out due between Jul - Dec. Cannot evaluate on the basiis of one quarter Mar-Jun is a dull season as it is since it comes after the festival /marriage period Sep - Mar.But I am not too much bothered by the quarterly fluctuation in net profits since the real test is whether it can grow its topline at 90%-100% for the next 4 years. FOr the last 3 years they have the question is can they for the net three.
The real margin expansion will come in Fy 08 from the financial services Insurance and Real Estate space. That should add up to the bottomline .
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 03/Oct/2006 at 7:49pm
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This is an interesting link to what Wal Mart has done over the last 17 years.Any one interested in retailing stocks should see this.
1) The EPS has always increased y-o-y The CAGR for the 17 years is at only 13.65%
2) The Gross margins are at 24% and the operating margins are at 6.3% and the net profit margins is at 3.5%
3) Same store sales are increasing at less then 3% now. This is the first danger signal that a retailer could give us.
4) The RoE is at near to 20% indicating efficient use of capital.
http://www.valueline.com/dow30/f9638.pdf - http://www.valueline.com/dow30/f9638.pdf ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: prosperity
Date Posted: 03/Oct/2006 at 8:56am
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Basantji, The profitability ratios and numbers you have specified looks pathetic for a growth investor who after investing for 17 long years is looking back at what he got ! Did Buffet buy Walmart or its likes ? Is Walmart as profitable for shareholders as it is for its customers ? I agree on one count - looking at Biyani's presentation on whatz coming next in retail - that India is poised for explosive retail growth ... but this is going to be saturated in next 2-3 years... maybe 2008 or 2009 ... maynot be even 2010.. And after that Biyani's venture and Reliance retail venture and Birlas retail venture and Tata's retail venture, etc... would all become saturated and from 2008, thereon - would give same profitability figures as Walmart has given for past 17 years .... CAGR of 13.65% ... doesn't meet buffet criteria of minimum 20% CAGR !!
3.5% Net profit margin - Pathetic !!
Why are we considering above numbers as Golden and then justifying investments in Pantaloons ? I fail to understand that !
On the contrary, we should see the profitability figures first and then justicy holding these in our growth portfolio ...
Whatever explosive retail supermart growth is remaining is there only for next 2 years or max 3 years in my view .... then this business is getting mature and commoditized !
------------- |
Posted By: basant
Date Posted: 03/Oct/2006 at 10:18am
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1) These figures are from 1990 onwards. Wal Mart started from 1971...
2) http://www.theequitydesk.com/forum/forum_posts.asp?TID=104 - Buffet recently increased exposure to Wal Mart
3) WOrldwide that is the profit margin of retailers and people have made some big money in retail stocks globally.
4) Since listing Wal Mart has been more then a 5000 bagger (approx.) ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: go4lalit
Date Posted: 04/Oct/2006 at 5:35pm
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I was surprised to see their yearly reslults. They did an eps of 25/- per share and at this point of time the stock looks overvalued. Considering FY8E eps of 65/- the stock is trading at about 30 p/e
Even Infosys was overvalued in 2000 & if u look at last 6 year return from Infosys it is almost Nil. Even in Last one year Pantaloon gave Nil return.
The upside seems to be capped now (from a 12-18 month point of view). One can exit the stock if their horizon is 12-18 month. Fresh entry should be considered only when the stock is beaten down.
Banastji what do you say?
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Posted By: basant
Date Posted: 04/Oct/2006 at 6:10pm
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Considering FY8E eps of 65/-
______________________________
On trailing basis the co. does look expensive but it was as per expectations. The real kicker will come in Fy 07 -08 when the reults from their varioous JV's will come in. Enam expects the company to do an EPS of Rs 80 for Fy 08. The kind of space they have signed up should take their retail area up 4 times in the next 2 years. If sales go up so should EPS. For the short term stock does look over valued but Pantaloon is yet to see the benefits of its real estate forays also.
In Kolkata (Jessore Road) they were booking flats at Rs 1200 per sq feet about 4 months back and are now doing it at Rs 1800 sq feet So the upsides in EPS could come in.Broadly it is for the long term investors. Infy in 2000 traded at a PE of 300 times. I wish I could see a PE like that without the EPS decreasing. In Fy 07 the company should do between Rs 50 - Rs 55 EPS and that is just valued on equal terms with http://www.theequitydesk.com/forum/forum_posts.asp?TID=103 -
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Posted By: reema
Date Posted: 04/Oct/2006 at 9:14pm
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Now if you say Trent is at 29 times and pantaloon at Rs 55 EPS is 33 times can an investor sell trent and buy pantalon as on PEG basis pantaloon with growth of 90% -100% is cheaper then trent growth at 40%.I have small qty of both bought after reading the report here. ------------- You should try to add wealth not multiply it |
Posted By: reetesh
Date Posted: 07/Oct/2006 at 2:26pm
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Hi Sir, are you happy with Bhiyani`s plans to be in A-Z forms of retail for example from Hospital to Hospitality from Financing & Financial services etc,etc,etc, he want to conquer whole of India but by end of it all he will not be sure what he wants to focus on really. I read some where that this is the case with retailers that from good business model they go bankrupt in no time. ------------- When going gets tough, that’s when tough (people) gets going. |
Posted By: go4lalit
Date Posted: 07/Oct/2006 at 4:40pm
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Reetesh, you have raised a good point. I am little worried about where Mr. Biyani's focus is.
Even global retailers are very much focused. For example, WalMart concentrates only on Value retailing. Other like, Circuit City etc are only in electronics. GAP etc are only in Lifestyle retailing.
Later or sooner they have to concentrate on one format of retailing.
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Posted By: basant
Date Posted: 07/Oct/2006 at 11:16pm
Both of you are correct. Biyani is moving against the convention but in Europe and the West Retail did not grow at 30% anually it grew normally with the GDP. In fact a good friend of mine who invests across the globe and has really done well did not buy this stock when it was at Rs 200 (because he had seen walmart and Target in some detail) so I am not fighting a case for Biyani but I would rather overlook these things at least for now. This was built into the price about 3 years back - nothing new.
The real question is whether Biyani and his team will be able to execute or not. If they can, we have a 10 -15 bagger in our hands. If they cannot we should lose 50%. That is the call I am taking. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 09/Oct/2006 at 4:45pm
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4QFY06 Results Update SECTOR: RETAILING Amnish Aggarwal ([email protected]) Tel: +91 22 3982 5404 Buy Previous Recommendation:Buy Rs1,853 3 October 2006 STOCK INFO. BSE Sensex: 12,366 S&P CNX: 3,570 Pantaloon Retail BLOOMBERG PF IN REUTERS CODE PART.BO ? Pantaloon’s 4QFY06 results were below expectations, with the company reporting a PAT of Rs158m against our estimate of Rs197m. ? Sales for the quarter grew 60.9% YoY to Rs5.7b, driven largely by strong growth in the Value Retailing segment. The company’s Value Retailing segment (Big Bazaar and Food Bazaar) grew 90% YoY; while its Lifestyle Retailing segment grew (Pantaloon and Central Mall) grew 45% YoY. ? EBITDA margins increase of 20bp YoY to 6.5% in 4QFY06 despite 140% jump in staff costs (to 7.7% of sales from 5.1% on YoY basis due to new staff addition in planned formats) infuses confidence in the company is ability to increase margins. ? We expect retail space addition to accelerate in the current year as the company is expected to add 0.7m sq ft in the coming two months itself. We have assumed retail space increase to 4.6m sq ft in FY07 and 6.9m sq ft in FY08 from current levels of 2.6m sq ft. ? We expect the company to change the inventory valuation method to lower of cost and market value from the current method which includes a part of mark-up also. Consequently, we have lowered our FY07 EPS estimate from Rs45.7 to Rs41.4. We are increasing our FY08 EPS estimate from Rs71.1 to Rs75.3 due to expected increase in margins due to cost efficiencies and economies of scale. ? We expect the company to unlock value from stake divestment in Real Estate and Private Equity Venture as also its Home Solutions Retail. The stock is currently valued at 44.8x FY07E earnings and 24.6x FY08E earnings. We maintain Buy. QUARTERLY PERFORMANCE (Rs Million) Y/E JUNE FY06 FY07E 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net Sales 3,648 4,720 4,554 5,752 6,100 7,600 7,700 9,560 18,678 30,960 YoY Change (%) 81.4 98.0 65.6 55.6 67.2 61.0 69.1 66.2 72.3 65.8 Total Exp 3,368 4,341 4,169 5,379 5,605 6,955 7,055 8,875 17,257 28,490 EBITDA 280 379 385 373 495 645 645 685 1,420 2,470 Margins (%) 7.7 8.0 8.5 6.5 8.1 8.5 8.4 7.2 7.6 8.0 Depreciation -38 -46 -59 -66 -65 -70 -90 -91 -208 -316 Interest -57 -79 -101 -98 -115 -130 -155 -183 -335 -583 Other Income 7 4 5 30 6 4 5 4 42 19 PBT 192 258 230 239 321 449 405 415 919 1,590 Tax -57 -72 -68 -80 -94 -120 -114 -150 -277 -477 Rate (%) 29.7 28.0 27.0 33.6 29.1 26.7 28.1 36.0 30.2 30.0 PAT 135 186 162 158 228 329 291 266 642 1,113 YoY Change (%) 94.9 83.0 52.0 46.7 68.2 77.2 79.2 67.7 66.5 73.5 E: MOSt Estimates FY06 FY07E Equity Shares (m) 26.9 52-Week Range 2,060/1,080 1,6,12 Rel. Perf. (%) 9/-14/-29 M.Cap. (Rs b) 49.8 M.Cap. (US$ b) 1.1 YEAR NET SALES PAT EPS EPS P/E P/BV ROE ROCE EV/ EV/ END (RS M) (RS M) (RS) GROWTH (%) ( X ) ( X ) ( %) ( %) SALES EBITDA 06/06A 18,678 642 23.9 31.6 77.6 12.6 16.2 15.3 2.9 37.6 06/07E 30,960 1,113 41.4 73.5 44.8 10.0 22.3 16.8 1.8 22.9 06/08E 53,388 2,117 75.3 82.0 24.6 5.9 23.9 20.3 1.1 13.4 Pantaloon Retail 3 October 2006 2 Value retailing driving overall revenue growth; margins likely to expand Pantaloon’s 4QFY06 revenues grew 60.9% YoY to Rs5.7b, driven by Value Retailing segment (Big Bazaar and Food Bazaar). Value Retailing grew 90% YoY for the quarter, while Lifestyle revenues grew 45%. For FY06, value retailing grew 114% YoY and Lifestyle retailing reported a growth of 52% YoY. Value retailing reported flattish margins with 4bps increase in 4QFY06 and 8bps decline in FY06, which shows the rising impact of private labels and economies of scale. The trend looks encouraging especially as the company had increased area under low margin (15% Gross margins) Food bazaar format by 48% as against 37% (Gross Margin 25%) increase in area under higher margin Big Bazaar format in value retailing. Lifestyle retailing reported 30bps and 180bps decline in PBIT margins mainly as the lower margin Central Seamless Mall format operated for the entire year. VALUE RETAILING: RISING SALES PROPORTION Source: Company/ Motilal Oswal Securities We expect value retailing to continue driving the revenue growth during FY07 due to higher stores addition in this format during the current year. The company plans to add nearly 0.7m to its retail space in the coming 2 months which will be mostly in the value retailing segment. Despite higher share of value retailing we expect the overall margins to improve in the coming years as Pantaloon shifts to increased sale of private labels and brands of associate companies across formats. In addition higher economies of scale will also enable the company to have better sourcing arrangements, which would boost the reported profitability. Source: Company/ Motilal Oswal Securities Higher staff cost cuts EBITDA margin expansion Pantaloon reported 20bps increase in EBITDA margin in 4QFY06 despite 140% jump in staff costs, which increased from 5.1% of sales to 7.7%. Increased hiring of new staff for the upcoming retail stores and new formats (Electronics, Health and Beauty etc) contributed to nearly 50% of increase in the staff costs. Management expects staff costs to decline as new businesses scale up. TREND IN EBITDA MARGIN TREND IN SALES GROWTH SHARP INCREASE IN STAFF COST (%) Source: Company/ Motilal Oswal Securities 0% 25% 50% 75% 100% Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Value Retailing Lifestyle Retailing 0 2,000 4,000 6,000 8,000 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 20 45 70 95 120 Sales (Rs m) - LHS Growth (%) - RHS 100 175 250 325 400 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 0 3 5 8 10 EBITDA (Rsm) - LHS EBITDA Margins (%) - RHS 4 5 6 7 8 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Pantaloon Retail 3 October 2006 3 Inventory valuation impact; lowering FY07 estimates but upgrading FY08 estimates While Pantaloon was expected to change the method of valuation of closing stock from current trend which includes markup over the cost price to the standard method, the same is likely to be introduced from the next year. We estimate the impact to be at 5% of the incremental inventory cost for the company. Consequently we have reduced the EPS estimates for the company from Rs44.9 to Rs41.4 for FY07. However we expect Pantaloon to report 50bps EBIDTA margin improvement in the coming two years as the benefits of economies of scale, better negotiations with vendors and scale up in higher margin formats like Pantaloons, Gini & Jony and ALL, logistics venture and long term contracts with vendors for Agri products and increased sale of its own and associate brands in the Central format accrue. Subsidiaries to unlock value; capital infusion to aid expansion Pantaloon seems best placed to encash the unfolding retail story in India. The company has announced issue of 12m shares to promoters which would be followed by a preferential issue. We expect the company to garner Rs4.5b from these issues. Pantaloon plans to hive off 24% stake in Home Solutions Retail, Future capital and other subsidiaries to generate another Rs5b. Infusion of Rs10b in the company would strengthen the operations and enable it to expand the retail operations at a fast pace. We expects some of the ventures like Real Estate Fund and private equity to add value to the company in the coming few years. We have conservatively valued Pantaloon’s share in these funds at over Rs175 per share. We have not factored into the inflows from the preferential issue to investors, sale of stakes as well as investment in some of the new initiatives like insurance etc. Although it does not seem tangible to access the value in these subsidiaries as of now but once they scale up, value unlocking for the company can be significant. Valuation and view We expect domestic retail industry to become increasingly competitive due to the entry of new players. However, we believe that Pantaloon retail is the best play on the organised retailing in India. We expect stake sale in subsidiaries to act as trigger for further re-rating of the stock. The stock is currently valued at 44.8x FY07E EPS, 24.6x FY08E EPS based on the diluted equity after issue to promoters. We maintain Buy. Pantaloon Retail 3 October 2006 4 Company description Pantaloon Retail is the largest organized retailer in India with retail space of more than 2.7m sq. ft. Pantaloon retails multiple categories through different format offerings like departmental stores (Pantaloon), hypermarkets (Big Bazaar), seamless mall (Central) and Food bazaars (Grocery stores). Key investment arguments ? Pantaloon is the best play in the fast-growing organized retail market due to rapid scale up in operations, tied up real estate and established retail formats. ? The Company has set up a clutch of subsidiaries in Real estate and Private equity management, logistics, joint ventures for insurance and various retail formats which unlock substantial value in the coming few years. Key investment risks ? High inventory levels, slippages in development of real estate and unrelated diversification into areas like insurance. Recent developments ? Announced 5:1 stock split, issue of 12m shares to promoters and Rs2.6b preferential issue. ? plans to unlock value in subsidiaries by raising Rs5b. Valuation and view ? We forecast EPS to be Rs41.4 for FY07E and Rs75.3 for FY08E based on diluted equity after issue to promoters. ? The stock currently trades at 44.8x FY07E earnings and 24.6x FY08E earnings. We maintain Buy. Sector view ? We are positive on the retail sector. We expect the sector to clock revenue growth of 30%-35% CAGR over the next five years. ? Players such as Pantaloon Retail with a strong hypermarket format and presence in larger number of categories are likely to be bigger winners. ? Long term prospects appear bright, given low store penetration and rising consumers’ incomes. COMPARATIVE VALUATIONS PANTALOON SHOPPERS TITAN P/E (x) FY07E 44.8 56.5 27.6 FY08E 24.6 44.8 20.2 EV/EBITDA (x) FY07E 22.9 28.2 17.6 FY08E 13.4 20.7 13.6 EV/Sales (x) FY07E 1.8 2.4 2.1 FY08E 1.1 1.7 1.7 P/BV (x) FY07E 10.0 6.4 13.8 FY08E 5.9 5.8 8.8 SHAREHOLDING PATTERN (%) JUN-06 MAR-06 JUN-05 Promoter 44.2 44.2 43.1 Domestic Inst 6.7 5.7 2.8 Foreign 28.7 28.7 30.0 Others 20.4 21.3 24.1 Pantaloon Retail: an investment profile STOCK PERFORMANCE (1 YEAR) EPS: MOST FORECAST VS CONSENSUS (RS) MOST CONSENSUS VARIATION FORECAST FORECAST (%) FY06 41.4 46.1 -10.2 FY07 75.3 75.3 - TARGET PRICE AND RECOMMENDATION CURRENT TARGET UPSIDE RECO. PRICE (RS) PRICE (RS) (%) 1,853 2,025 9.3 Buy 1,000 1,275 1,550 1,825 2,100 Oct-05 Jan-06 Apr-06 Jul-06 Sep-06 -55 -40 -25 -10 5 Pantaloon (Rs) - LHS Rel. to Sensex (%) - RHS Pantaloon Retail 3 October 2006 5 INCOME STATEMENT (RS MILLION) Y/E JUNE 2004 2005 2006AE 2007E 2008E Net Sales 6,583 10,840 18,678 30,960 53,388 Change (%) 48.0 64.7 72.3 65.8 72.4 Total Expenditure -6,033 -9,944 -17,257 -28,490 -49,047 EBITDA 550 896 1,420 2,470 4,341 Change (%) -89.9 62.9 58.5 73.9 75.8 M argin (%) 8.4 8.3 7.6 8.0 8.1 Depreciation -88 -133 -208 -316 -463 Int. and Fin. Charges -231 -275 -335 -583 -874 Other Income - Recurring 13 43 42 19 20 P rofit before Taxes 244 531 919 1,590 3,025 Change (%) -95.5 117.7 73.0 73.0 90.2 M argin (%) 3.7 4.9 4.9 5.1 5.7 Tax -46 -145 -277 -477 -907 Tax Rate (%) -18.7 -27.4 -30.2 -30.0 -30.0 P rofit after Taxes 198 386 642 1,113 2,117 Change (%) -96.5 94.4 66.4 73.5 90.2 M argin (%) 3.0 3.6 3.4 3.6 4.0 Extraordinary Items 3 13 0 0 0 Reported PAT 201 399 642 1,113 2,117 BALANCE SHEET (RS MILLION) Y/E JUNE 2004 2005 2006E 2007E 2008E Share Capital 191 220 269 269 281 Reserves 758 1,965 3,692 4,715 8,566 Net Worth 949 2,185 3,961 4,984 8,847 Loans 2,361 2,862 4,019 7,451 9,300 Deferred Tax 60 130 224 510 1,054 Capital Employed 3,370 5,178 8,204 12,945 19,202 Gross Block 1,847 2,511 3,739 5,985 8,259 Less: Accum. Depn. -243 -374 -446 -762 -1,225 Net Fixed Assets 1,604 2,137 3,292 5,222 7,033 Capital WIP 144 158 246 268 417 Investments 53 319 195 195 195 Curr. Assets, L&A 2,300 4,039 6,688 10,870 18,088 Inventory 1,576 2,759 4,590 7,559 12,316 Account Receivables 176 123 251 497 860 Cash and Bank Balance 138 215 249 471 855 Others 410 941 1,597 2,343 4,056 Curr. Liab. and P rov. 734 1,448 2,220 3,612 6,533 Other Liabilities 665 1,265 1,928 3,175 5,758 Provisions 69 183 292 437 775 Net Current Assets 1,566 2,591 4,468 7,258 11,555 Miscelleneous Expenditure 4 3 3 2 1 Application of Funds 3,370 5,178 8,204 12,945 19,202 E: MOSt Estimates RATIOS Y/E JUNE 2004 2005 2006E 2007E 2008E Basic (Rs) EP S 10.5 18.1 23.9 41.4 75.3 Cash EPS 15.0 23.6 31.6 53.2 91.8 BV/Share 49.6 99.3 147.3 185.4 314.8 DPS 1.5 2.5 2.5 3.0 4.0 Payout % 14.3 13.8 10.5 7.2 5.3 Valuation (x) P/E 102.2 77.6 44.8 24.6 Cash P/E 78.5 58.6 34.9 20.2 EV/Sales 4.8 2.9 1.8 1.1 EV/EBITDA 58.2 37.6 22.9 13.4 P/BV 18.7 12.6 10.0 5.9 Dividend Yield (%) 0.1 0.1 0.2 0.2 Return Ratios (%) RoE 20.9 17.6 16.2 22.3 23.9 RoCE 14.1 15.6 15.3 16.8 20.3 Working Capital Ratios Debtor (Days) 10 4 5 6 6 Asset Turnover (x) 2.0 2.1 2.3 2.4 2.8 Leverage Ratio Debt/Equity (x) 2.5 1.3 1.0 1.5 1.1 CASH FLOW STATEMENT (RS MILLION) Y/E JUNE 2004 2005 2006E 2007E 2008E OP/(loss) before Tax 462 763 1,212 2,154 3,878 Int./Div. Received 13 43 42 19 20 Depreciation and Amort. 88 133 208 316 463 Interest Paid -231 -275 -335 -583 -874 Direct Taxes Paid -46 -145 -277 -477 -907 (Incr)/Decr in WC -1,432 -948 -1,843 -2,568 -3,913 CF from Operations -1,146 -429 -994 - 1,139 - 1,333 Extraordinary Items 3 13 0 0 0 (Incr)/Decr in FA -1,994 -677 -1,315 -2,269 -2,423 (Pur)/Sale of Investments 62 -267 125 0 0 CF from Invest. - 1,929 -931 - 1,191 -2,269 -2,423 Issue of Shares 183 0 0 0 0 (Incr)/Decr in Debt 2,361 501 1,157 3,432 1,849 Dividend Paid -33 -63 -90 -90 -126 Others 701 998 1,152 288 2,417 CF from Fin. Activity 3,212 1,436 2,219 3,630 4,140 Incr/Decr of Cash 138 76 34 222 384 Add: Opening Balance 0 138 215 249 471 Closing Balance 138 215 249 471 855 Pantaloon Retail 3 October 2006 6 This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon such. MOSt or any of its affiliates or employees 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. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. MOSt and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. Disclosure of Interest Statement Pantaloon Retail 1. Analyst ownership of the stock No 2. Group/Directors ownership of the stock No 3. Broking relationship with company covered No 4. Investment Banking relationship with company covered No This information is subject to change without any prior notice. MOSt reserves the right to make modifications and alternations to this statement as may be required from time to time. Nevertheless, MOSt is committed to providing independent and transparent recommendations to its clients, and would be happy to provide information in response to specific client queries. For more copies or other information, contact Institutional: Navin Agarwal. Retail: Manish Shah, Mihir Kothari Phone: (91-22) 39825500 Fax: (91-22) 22885038. E-mail: [email protected] Motilal Oswal Securities Ltd, 3rd Floor, Hoechst House, Nariman Point, Mumbai 400 021 Rated - The Best Local Brokerage House in India by ------------- Make your Life as simple as possible. |
Posted By: catchsudipto
Date Posted: 11/Oct/2006 at 10:27am
|
To check the Investor update of pantaloon for the month of sep, go to http://www.pantaloon.com/html/sept06.pdf - http://www.pantaloon.com/html/sept06.pdf ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 11/Oct/2006 at 11:27am
|
What is more interesting i: a) Same store sales growth
b) The addition to space over the next 3 months is in excess of over 10,00,000 sq feet. That is 1.5 times Trent. and 30% to Pantaloon's current space.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 12/Oct/2006 at 1:26pm
|
Dear Sir, I find same store growth in lifestyle retailing(32.55%), for the month of july to sep is more exciting that growth in value retailing(25.93). Yes they are going to expand in a very very big way. They are adding lots of now space, but still i feel they are lagging by 6 months in their target ( may be due to different reason). I feel market is not looking at this changes as they can create wave with their private labels. i love that lombard brand for their cut. Some days back, before durga puja i went to their factory retail outlet at camac street. I was surprised to see that there is hardly any place to stand inside. There was hardly any place to watch customes buy. But still market is not recognizing its potential. ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 12/Oct/2006 at 1:50pm
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I think that the market is focused on whether Biyani will exist in 3 years or not. Also the most important thing is the value unlocking that they would do from their real estate business. A few months back they were booking space in their Jessore Road (Kolkata) complex at Rs 1200 now that rate has jumped to Rs 1800. If real estate prices crash Pantaloon does not feel the pinch since they are just an AMC and if they rise they make a fixed percentage over the annual hurdle rate of 8%.
Similarily Biyani has tied up almost all his retail expansion properties so that puts him on a better footing compared to the newer ones because his rates have been fixed but the market seems concerned on his "too big too soon" syndrome but if he delivers even 50% of what he has promised this stock would be a multibagger. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 12/Oct/2006 at 3:59pm
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Dear Sir, some time back u told us that there is an understanding b/n Mukesh ambani and kisore. so reliance is targetting the small city while kishore is targetting the metro & tyre-II cites. Now my question is if that is so then who can be potential threat to Biyani? hwy there is question as whethere biyani will exist or not? what will be the potential signs that he might fail. Or its just that as he is building an empire from scratch no body is believing him, that he can deliver. ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 12/Oct/2006 at 5:00pm
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That was a grapewine. I see that the greatest threat to Biyani could be Biyani himself (growing too fast) and no one. But I am convinced that these are only market fears and he should pull it off. It is difficult for a Rs 80 crore company to become a Rs 5000 crore rather then for a Rs 5000 crore company to become a Rs 50,000 crore company.Two things that I would watch out for are:
1) Operating margins should not go below 6%.
2) Same store growth in sales.This means people are coming back in larger number to these stores y-o-y.and that is posistive.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: BubbleVision
Date Posted: 12/Oct/2006 at 5:52pm
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If So, BasantJi, could Pantaloon still be a "multibagger"....
I would now keep the stock on my radar screen.... ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: catchsudipto
Date Posted: 12/Oct/2006 at 6:49pm
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Dear Sir, I agree wit your view that its difficult for a 5000 cr company to die suddenly. We all know that biyani is trying to grow too fast due to fear of loosing no 1 spot in the retail chain. I feel his only competitor is reliance, who can dislodge hi no 1 position ( market believes that). there is also question that how long biyani can be no 1. I personally believe that by raising enough money successefully and fast, either form market, by selling some portion in JV( value unlocking) he might atleast keep 80% of his promise. lets hope for the best. Sir what about FT? You always say that it can become big? But how big it can become/ What is a gurantee that tomorrow a new commidity exchange will not come up and it eats MCx's market share.what is the real picture. Now they are saying in their A report that IBX can become 10 times more big than MCX. but its their projection, what is the real picture. can u please throw some details light on it from the information u are traking it for a long time. Thanks sie ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 12/Oct/2006 at 7:02pm
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Biyani expects to do a 100% y-o-y for the next 4 years, property is tied up brand is created (Big Bazar, pantaloon) so the only hurdle is to manage growth.
He expects to do a sale of Rs 30,000 crore in Fy 10. net profit margin at 4% works out to Rs 1200 crores; assuming a 50% strike rate net profit should be Rs 600 crores; mind you stores are all ready to be opened so either it would be close to 100% or just nothing (in that case we could get out at 50% today's prices). Number of shares on diluted equity should be 2.8 crores. EPS works out to be Rs 220 (approx). market will give it a PE of 30. price comes to Rs 6600 which is almost 4 times from now at 50% targets. At 100% price will be more then double since PE's will expand with growth and there lies the iceing on the cake.
This working is very simplictic but I like calculating in such terms since they are done with a premise that errors (invesntory levels , debtors etc) will canmcel out each other.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 12/Oct/2006 at 7:16pm
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Dear Sir, Thanks for a very very prompt reply. I really love your comments for a simple and easy to understand method which peoples like us can understand. yes its something biyani is trying to achieve, sales of 30000 cr in year 2010. But by kmwing him, ( his style) i am sure that by that time he reaches 30 to 40% of his target i.e sales of 10000 to 15000 cr he will again try to expand his target behond anyone's guess. Who has predicted him to set such a stiff target all on a sudden. I believe in 2008 or in 2009 will will again surprise us will a new target and market will again start discussing whether he will get there or not. Sir i what your comments on financial technology as i have entered newly i have lots of question on it. So sir if possible pl answer . Sir what about FT? You always say that it can become big? But how big it can become/ What is a gurantee that tomorrow a new commidity exchange will not come up and it eats MCx's market share.what is the real picture. Now they are saying in their A report that IBX can become 10 times more big than MCX. but its their projection, what is the real picture. can u please throw some details light on it from the information u are traking it for a long time. ------------- Make your Life as simple as possible. |
Posted By: kulman
Date Posted: 17/Oct/2006 at 9:46pm
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Read about this interesting (speculative) development:
http://www.marketwatch.com/news/story/Story.aspx?guid=%7B3AD6AA59%2DD2A7%2D45BC%2D9F1A%2D088CECA5B566%7D&siteid= - Wal-Mart Stores Inc. is seeking to buy a chain of supercenters in China for about $1 billion, a move that would give it control of that country's largest food-and-department store network, according to published reports.
The world's largest retailer agreed to buy Trust-Mart, a Taiwanese company. Trust-Mart rang up $1.4 billion in sales last year.
------------------------
Does this give any indication about the valuation methodology for acquisitions in retailing space?
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 17/Oct/2006 at 12:46pm
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If trust-mart had sales of 1.5 bill(marketcap should be way higher than its sales usually), how come walmart is only giving 1 bill for buying it?? The price should be at least 3-5 times the annual sales? I dont understand this?
Also Basant ji, I read on the 1st page of "pantaloon" here, that you thought arket would give a PE of 30 to Pantaloon. But currently it is at a PE of around 70, as per TTM EPS values of Pantaloon Retail on moneycontrol.
Why such a low PE of 30, when its growing at way faster than that? Do you expect market to give it a PE of 30 or arounds within the next 4 years, or after that?
Thanks a bunch! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 17/Oct/2006 at 9:19am
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I read on the 1st page of "pantaloon" here, that you thought arket would give a PE of 30 to Pantaloon. But currently it is at a PE of around 70, as per TTM EPS values of Pantaloon Retail on moneycontrol.
__________________________________________________________
Any PE above 30 is temporary. We as investors should need to realise that and also make adjustments to that effect in our projections. Finally no company can grow http://www.theequitydesk.com/forum/forum_posts.asp?TID=119 - in excess of your RoE without raising capital (I speak like a broken record here). The growth would come down to 30% and below whether that happens in 20100 or in 2015 is debatable.But while making a 2010 projection we should take a PE of 30 times only. If it is better then that it should serve as iceing on the cake.
Retailing companies have low profit margins so the market cap to sales will never be at any fancy level. On the other hand look at http://www.theequitydesk.com/forum/forum_posts.asp?TID=142 -
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Posted By: basant
Date Posted: 17/Oct/2006 at 9:25am
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Om Shivavaya: We also need to see how much debt/losses Trust Mart was acarrying. Also whether TrustMArt was making profits on consistent basis or not- how desperate the promoters were to sell. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: prashantmohta
Date Posted: 19/Oct/2006 at 9:52am
| http://www.valuenotes.com/VNTeam/vn_investRetailSector_18oct06.asp?ArtCd=103512&Cat=&Id - http://www.valuenotes.com/VNTeam/vn_investRetailSector_18oct06.asp?ArtCd=103512&Cat=&Id = |
Posted By: kulman
Date Posted: 23/Oct/2006 at 9:35am
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Interesting news on oversupply like situation in retailing space in some cities:: http://www.business-standard.com/common/storypage_c.php?leftnm=10&bKeyFlag=BO&autono=262712&chkFlg= - Malls offer space to offices as retail demand lags
Does it further strengthen view that it's http://www.theequitydesk.com/forum/forum_posts.asp?TID=490&KW=pick+axe&PID=4705#4705 - better to play pick axe theme? ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: basant
Date Posted: 24/Oct/2006 at 6:56pm
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The pick axe theory has a low risk and a low reward but these over supply situations could persist at some places (we have to look at it in totality) the benfit of these retailers is that if they see that particular store is not doing well they can sift - since they are on rent. Pantaloon has done it on a couple of occassions.But as long as Pantaloon is showing a same store sales growth of more then 15% I would not be worried at all. Over supply will drive down rents and create more demand for the anchor stores so it is just as how we see them. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 27/Oct/2006 at 10:48am
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Sir have u watched the quarter result of pantaloon. Its stunner . Theu have done an Rs 14.37 EPS this qtr. ___________________________________________________________ No the profits include an income on sale of investments. The results are normal or rather less then expected lts.The growth in sales is less then the growth in net profits but that could be because of the massive ramp up they have planned for the Oct - Dec period. But we need to watch this company closely for some more time before we go negative on the results.
Remember Citigroup which had a initiated a sell with a target of Rs 1100 some time back picked up about 2 lac shares in the last quarter. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 27/Oct/2006 at 11:56am
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Dear Sir, Yes u are right. I saw the result flash in NDVT, but did'nt know that its has a huze other income part. What is the wrong in the company? why that are not able to deliver results? are there any fundamentally wrong in the company as they are not abel to deliver good results for a long time and its underperforming index for a long time. Moreover there is a transition going to happen in the retail segment as maybe reliance will overtake pantaloon retail in the near future say 2-3 years down the line. Will there be serious PE downgrade for pantaloon in the near future? please throw some insight inthis stock. thanks ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 28/Oct/2006 at 12:08pm
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Nothing new to add. They are ramping up and the benefits should accrue over time Q3 and Q4 and more importantly Fy 08. ALso a lot of their investments into JV's is yet to throw back cash. Kotak would not have invested in their home solutions if they had no confidence in the Pantaloon business model. I am holding on. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 28/Oct/2006 at 12:22pm
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Dear Sir, I am also going to hold on to pantaloon but becomming a bit worried of late as i hold the highest percentage of my holding in pantaloon. Pantaloon is trying to ramp up fast as i feel its already discounted in the market. But there is also large risk of project execution as pantaloon in already running on huze negative working capital. Do u feel this ramp will create more negative working capital? What si your guts feeling about the JV's as biyani is betting huze in those jv's. When do u feel those jv is start paying back? who will pantaloon be effected will those JV's delay paying back cash by a a wide margin? At what price kotak is taking 6% stake in home solutions? any idea Sir Thanks ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 28/Oct/2006 at 1:23pm
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huze negative working capital. Do u feel this ramp will create more negative working capital?
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When iyt was Rs 50 it had negative W/c so it has been a 40 bagger with all that concern.Fy 08 onwards co. will start earning from its numerous JV's if that increased portfolio allocation worries you why not shift to some otherstock and reduce the position a bit. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 28/Oct/2006 at 1:59pm
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ICICI Venture Funds Management and Kotak SEAF India Fund have together invested over Rs 1200 million in Home Solutions Retail, a 100% subsidiary of Pantaloon Retail, javascript:openNewsMain%28/shares/company/quoteShow.php?icode=PANFASIA%29 - (Q , javascript:openNewsMain%28/shares/news/corporateNews.php?cSelect=5&icode=PANFASIA%29 - N , javascript:openNewsMain%28/shares/company/chartShow.php?cSelect=2&icode=PANFASIA%29 - C , javascript:openNewsMain%28/shares/company/financial.php?cSelect=3&icode=PANFASIA%29 - F) * reports Economic Times. Source: IRIS NEWS DIGEST (28 October 2006)
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 28/Oct/2006 at 7:16pm
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Dear Sir, Thanks for the comforting words. I didn't know that pantaloon has -ve W/C when it was Rs 50. Sir can please suggest some stocks where i can bet my money by reducing some holding in pantaloon ( what about FT?). Thanks ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 28/Oct/2006 at 7:25pm
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FT and pantaloon are both of a similar kind. Tv 18 looks set for interesting things. Let us see their results on Monday. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 28/Oct/2006 at 7:35pm
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Dear Sir, Ya i think it is a good choise. Sir are u suggesting me to wait for the result and then buy or it will be better to buy in the early morning as i feel it the result is good i might have to pay more for it. What is your suggestion ? Thanks. ------------- Make your Life as simple as possible. |
Posted By: basant
Date Posted: 28/Oct/2006 at 7:37pm
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Tough call. Results should be good no doubt. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 28/Oct/2006 at 7:46pm
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Dear Sir, As result will be good , i feel its better to catch it before it goes up. It might come down also. lets see. Sir do u have any new news on FT. What about the permission Form RBI, about allowing FII to hold a stake in MXC. Is it a buy at this price ? Thanks as usual ------------- Make your Life as simple as possible. |
Posted By: tyler_durden
Date Posted: 31/Oct/2006 at 12:30pm
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Now essar group is entering the retail business. essar s other businesses have not rewarded investors greatly. do you think it will be a different story this time??
The Rs 10,000 crore Essar Group is getting into retail. It will launch stores to sell mobile phones by December or February. The buzz is that Richard Branson's Virgin Group will chip in with technical support and store design, reports CNBC-TV18. Mobile Shop, the likely name for Essar Group's telecom retailing venture, is set to offer you mobile phones and accessories. Sources say the group will launch 300 to 600 square foot stores in the next two or four months. It will start out with the top 10 cities and it hopes to have 2,500 stores up by 2008. Over the next five years Essar will invest about Rs 1,500 crore in the venture. Sources say that Essar is tying up with Richard Branson's Virgin Group for technical support and store design. In markets like the US and Britain, Virgin runs a chain of stores called Virgin Megastores. They sell music, electronic products and Virgin mobile phones. Interestingly, for real estate, Essar is believed to be talking with mom-and-pop businesses like Apparel Boutiques, to sell or lease out space. When contacted, an Essar Group spokesperson said, “As a group, we have been exploring opportunities and telecom is one such opportunity being looked at. It is too premature comment on the same." Studies suggest that India is emerging as the second largest market for mobile handsets. It will reach Rs 30,000 crore next year. Retailers like Pantaloon and service providers like Spice Telecom plan to sell hand sets too. And if Essar wants to corner 10% of the market, it's going to have to dial up a strategy that works. |
Posted By: basant
Date Posted: 31/Oct/2006 at 12:39pm
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As Manish says Essar. Modi and Videocon are groups investors could avoid even looking at if they want to remain wealthy ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Ajith
Date Posted: 31/Oct/2006 at 1:57pm
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Reliance Retail is getting agressive in Kerala.They have bought several properties at Kochi and are building near Chenganassery, 80 kms from Kochi.I think the competition in retail will be fierce,a real bloodbath with many casualies and only the consumer will certainly benefit along with several suppliers of goods availing of the retail networks being created.Ofcourse,the winners of the bloody retail battle will be huge winners.
I went to the newly-opened (medium-sized)Spencers(RPG) Food Store off MG Road Kochi on Saturday at 3-30P.M.I was the only customer. ------------- Ajith |
Posted By: basant
Date Posted: 31/Oct/2006 at 2:15pm
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I went to the newly-opened (medium-sized)Spencers(RPG) Food Store off MG Road Kochi on Saturday at 3-30P.M.I was the only customer
___________________________________________________________
That was busy time. How long were you there (alone)? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Ajith
Date Posted: 31/Oct/2006 at 4:18pm
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I was there for 20 minutes.I really was all alone.3 OR 4 salesmen were there to help settle bill.No work.
250 metres away on the busy MGRoad Varkeys,the local mid-sized chain of retailers was doing roaring business at 4 pm.Location matters perhaps and old habits perhaps die hard.But Reliance I am sure will draw large numbers and straddle the state with multiple formats. ------------- Ajith |
Posted By: basant
Date Posted: 31/Oct/2006 at 4:35pm
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.Location matters perhaps and old habits perhaps die
_________________________________________________________
While I think Reliance could pull it off I have a naging worry which I would like to be commented upon.
Generally retail generates an annual sales of Rs 800 - Rs 10000 per quare feet per anum. COnsidering Reliance's target for a sale of Rs 100,000 crores in Fy 10 this would result in a demand for about 100 - 120 million square feet.My questions:
a) Either Reliance gets all this area and pushes up real estate prices so that all new entrants (who have not signed space are left bleeding) while the older ones like Pantaloon etc who have already booked the property benefit.
b) Reliance is unable to gain that kind of area and they fall short of their targets.
c) Reliance gets that space but not in the heart of the city and as Mr. AJit pointed out Location does matter - this would have to be compensated by lower prices - The wal Mart way but that culture is yet to develop in India where people travel 20 kms to buy grocery.
At the moment the total mall space developed in India by 2010 is less then the total expansion plans of all retailers taken together. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Ajith
Date Posted: 31/Oct/2006 at 6:13pm
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Herd mentality rather than business mentality prevails in Kerala and I am sure mall building (already at least 6 huge ones are coming up in Kochi alone)will be the new status symbol and so -called business opportunity and there will be a huge surplus of space because bad roads and traffic constraints would turn out to be bottlenecks.Something similar could play out in the rest of the country.Another bright spot (for retailers)is that given the growth trajectory of the country and emerging consumption boom there will be at least 6 new Gurgaons and numerous Nasiks in the coming decade.
------------- Ajith |
Posted By: basant
Date Posted: 31/Oct/2006 at 8:50pm
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given the growth trajectory of the country and emerging consumption boom there will be at least 6 new Gurgaons and numerous Nasiks in the coming decade.
____________________________________________________________
Very good point you made. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: manishdave
Date Posted: 31/Oct/2006 at 11:31pm
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Location is very important for retail but it is less important to supermarkets than to coffee shop. If people are getting good value, and they need to buy lot of stuff they can go few of extra kms. In long run size of the store is going to be more important. Bigger the space better. Small Kiranas will survive but mid-sized stores might get killed. Location can change also with development. Since cities are expanding at fast space, a location not so good now could be great in 2 years.
I have one question. What do big stores do when there is power outage?
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Posted By: basant
Date Posted: 31/Oct/2006 at 11:38pm
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Never seen a power cut in abig store probably they keep back up but how far do people actually drive to pick up stuff from wal mart and what do you do personally there in US for your grocery/general needs? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 31/Oct/2006 at 12:27pm
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I dont know if it is relevant, but my theory goes as under: As Indian society becomes more and more materialistic(with booming economy and consumption overdrive), families will tend to become more and more nuclear in nature.
Group family->Nuclear family->Semi-Nuclear family inside that nuclea family itself. More and more family members wont even have time to spend with each other with multiple professionals in the same family(working father, mother, son and daughter). Going to a good store and buying quality stuff may even become a kind of family outing like picnics.
Why would someone drive all the way to buy grocery and stuff in the US and spend Gas and time for basic stuff?
1) Quality.
2) Good ambience and customer care at the shop.
3) Time to be with ones family, doing something together after a hectic day's schedule.
The reason why I would drive to a PVR to buy anexpensive ticket and see the same movie that I could have watched at a decent hall somewere not far from my locality. Usually I would not go alone ot PVR. I would go with my pals, to watch some movie and eat some good stuff too before I enter the hall and spend twice as much on a popcorn packet than I would done outside PVR.
That is why I believe, Malls alongwith entertainment-themed environments like a quality movie theatre, restaurant or pub shall do good.
Rest let's see what ACTUALLY happens!
Personally to me, Consumerism is a form of deep insecurity and whether we like it or not, Indian society is slowly moving towards it. Consumerism slowly creeps up and people start shopping and buying stuff just 'coz they have money to spend. I find that a deep form of insecurity. I for one of course will only spend on booze in the pubs and the stocks related to consumerism and nothing else! So I ean while the consumer spends!
 It is my personal viewpoint of course people so every1 has the right to differ! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: manishdave
Date Posted: 31/Oct/2006 at 2:30am
Personally I hardly buy gorceries. My wife doesn't trust my buying skill even though I tell her I buy good stuff(stock). We are vegetarian so we buy groceries from Indian stores. We buy some fruits/Vegetables milk etc from various stores including Wal Mart. I have heard that in remote locations, people drive even 50-60 miles to go to Wal Mart. But at the same time people drive that much to go to malls also.
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Posted By: kulman
Date Posted: 31/Oct/2006 at 7:54am
Very interesting discussion!
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: basant
Date Posted: 07/Nov/2006 at 12:41pm
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Pantaloon Retail is trading at Rs 2100 though I do not follow technicals the chart would exhibit the same pattern as Tv 18 - sideways consolidation; steep fall and then recovery. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 07/Nov/2006 at 12:52pm
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Steep fall? How much? been trying to get it at 1860 but just missed it all the time. I got into educomp. But Pantaloon still not coming down. Also, due to dearth of any good idea like TV18 or Educomp, I am just sitting on this cash. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |