Pantaloon Retail - Targetting 100% growth y-o-y.

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Topic: Pantaloon Retail - Targetting 100% growth y-o-y.

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basant
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Posted: 11/Sep/2006 at 9:10pm

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

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

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omshivaya
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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

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prosperity
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Posted: 12/Sep/2006 at 9:07pm

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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kulman
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Posted: 12/Sep/2006 at 9:13pm

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.

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**(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!)

Edited by kulman - 12/Sep/2006 at 9:49pm

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catchsudipto
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Posted: 12/Sep/2006 at 11:00am

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.

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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.

Edited by basant - 12/Sep/2006 at 11:12am

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basant
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Posted: 15/Sep/2006 at 12:01pm

This is a very interesting interview Biyani gave about a fortnight back.

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

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prosperity
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Posted: 16/Sep/2006 at 7:31pm

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 !

Originally posted by prosperity

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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basant
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Posted: 16/Sep/2006 at 7:52pm

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 .

Edited by basant - 16/Sep/2006 at 10:14pm

'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

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