Pantaloon Retail - visit note-Jun-12-EDEL - Edelweiss Research

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Edelweiss Securities Limited

We met Mr. C.P. Toshniwal, CFO, Pantaloon Retail (PRIL), in the backdrop

of the company recently cracking significant back-to-back deals to cut its

burgeoning debt. These steps will trim the company’s interest

expenditure and more such deleveraging exercises are on the cards as

lowering debt is the company’s prime priority currently. However, our

key concerns on slow SS growth (compared to peers like Shoppers Stop),

sale of higher margin ‘Pantaloon format’, high attrition in top

management and higher inventory days remain. Maintain ‘HOLD’.

Business realignment to rake in moolah, trim debt

PRIL has penned deals with Bennett Coleman (INR2bn has already come), ABNL

(INR8bn to come in June, further INR8bn debt to be carved off post demerger) and

Cloverdell Investment (INR4.2bn will flow in by June end) to cut its burgeoning debt.

We expect these deals to reduce core retail debt to ~INR33bn (from INR55bn) over

coming quarters. Also, on cards is divestment of stake (in part or full) in Staples Future

Office Products, Future Supply Chain, e-Zone, Home Town and Insurance business.

Private brands, food and customer loyalty programmes on focus

The company has significant private brands contribution coming from Fashion at Big

Bazaar (80% plus), Central and Brand Factory (30%) excluding its Pantaloons format.

Margin within the foods business is likely to improve as PRIL undertakes backward

integration. The company also plans to increase its ‘payback’ members from the

current ~5mn to ~10mn by March 2013 to drive growth even during slowdown. PRIL

will continue to expand at 1.5mn sq ft per annum (2mn plus earlier run rate/guidance).

Outlook and valuations: Cautious; maintain ‘HOLD’

We are enthused by the pick-up in deleveraging steps by PRIL. The company now

needs to refocus on its core retail business so that it can address slow SSG and get

better control on inventory and cash flow. The stock is trading at 24.2x and 17.6x

FY13E and FY14E EPS, respectively. We recommend ‘HOLD’ and rate it ‘Sector

Underperformer’ on relative return basis.

VISIT NOTE

PANTALOON RETAIL Finding its way out of debt trap

EDELWEISS 4D RATINGS

Absolute Rating HOLD

Rating Relative to Sector Underperformer

Risk Rating Relative to Sector High

Sector Relative to Market Equalweight

MARKET DATA (R: PART.BO, B: PF IN)

CMP : INR 165

Target Price : INR 190

52-week range (INR) : 364 / 124

Share in issue (mn) : 217.0

M cap (INR bn/USD mn) : 39 / 706

Avg. Daily Vol.BSE/NSE(‘000) : 3,746.0

SHARE HOLDING PATTERN (%)

* Promoters pledged shares

(% of share in issue)

: 30.1

PRICE PERFORMANCE (%)

Stock Nifty

EW Retail

Index

1 month 7.6 2.5 (5.0)

3 months 0.8 (5.2) (10.3)

12 months (43.3) (7.9) (21.1)

Abneesh Roy

+91 22 6620 3141

[email protected]

Hemang Gandhi

+91 22 6620 3148

[email protected]

Pooja Lath

+91 22 6620 3075

[email protected]

India Equity Research| Retail

June 14, 2012

Promoters*

44.7%

MFs, FIs &

Banks

14.3%

FIIs

23.0%

Others

17.9%

Financials

Year to June FY11 FY12E FY13E FY14E

Revenues (INR mn) 110,123 120,689 117,779 130,663

Rev. growth (%) 23.4 9.6 (2.4) 10.9

EBITDA (INR mn) 9,600 10,729 10,671 11,890

Net profit (INR mn) 1,897 895 1,481 2,030

Shares outstanding (mn) 217 217 217 217

Diluted EPS (INR) 8.7 4.1 6.8 9.4

EPS growth (%) (25.9) (52.8) 65.5 37.0

Diluted P/E (x) 18.9 40.0 24.2 17.6

EV/EBITDA (x) 11.3 10.8 7.4 7.0

ROAE (%) 6.3 2.8 3.8 4.3

* Nos represent core retail business (PRIL+ FVRL)

Retail

2 Edelweiss Securities Limited

Business realignment to rake in moolah, reduce debt

PRIL is uncomfortable with the current debt level and is looking to trim it. The company may

compromise on growth, but lowering debt is of prime importance. In the quarter ending

March, PRIL paid over 90% of its EBIT as interest expense in its core retail business, leading

to profit declining 76.2% YoY. Since then PRIL has inked a few deals and is in the process of

monetising other non-core assets to trim its burgeoning debt. We expect the core retail

debt to reduce to ~INR33bn (from INR55bn) over the coming quarters.

Deals already cracked:

Offloaded controlling stake in Pantaloon format to Aditya Birla Nuvo (ABNL)

PRIL offloaded its majority stake in Pantaloons (retail and factory outlet formats) to ABNL by

issuing debentures worth INR8bn. This money will be realised in June 2012. The company

will then demerge its Pantaloons format business through a court scheme of arrangement

transfer the net assets of its business, its apportioned debt of INR8bn (thereby reducing

debt of PRIL by further INR8bn) and debentures of INR8bn to the resulting entity. On

completion of demerger (post 8-10 months), the debentures will convert into equity of the

demerged entity of Pantaloon format. This will ensure ABNL’s ~44% stake in the demerged

entity. ABNL plans to hike its stake to 50.01% via an open offer. Thereby, the resulting entity

will become ABNL’s subsidiary. Existing PRIL shareholders will continue to own shares in the

demerged entity.

Thus, post demerger, PRIL’s total debt will reduce by INR16bn (INR8bn debt will be moved

to demerged entity’s books and INR8bn consideration paid by ABNL will be used to reduce

the debt).

INR2bn raised from Bennett Coleman

With focus on paring debt, PRIL raised INR2bn by issuing 8.16mn shares to Bennett Coleman

(BCCL) at INR245 on preferential basis. Post this transaction, BCCL's stake in the company

has risen from 2.12% to 5.8%.

Sale of Future Capital Holdings in two tranches to Warburg Pincus

PRIL has announced sale of 53.67% stake in Future Capital Holdings (through its subsidiary

Future Value Retail) in two tranches to Cloverdell Investment Ltd (one of the affiliated entity

Warburg Pincus). In the first tranche, PRIL will sell 40% of its stake at INR162/share

(consideration of INR4,198mn which will flow in by mid-May when open offer is

announced), and will continue to hold 13.67% in FCH, which it is likely to offload in the open

offer. This stake will be offloaded depending on the gap between the open offer made and

the extent to which it is subscribed. This will attract capital inflow of ~INR1,400mn,

depending on the stake sold. The deal will cut debt of the consolidated entity by INR44bn

(debt in books of Future Capital). Also, the consideration received from this transaction

(~INR5,600mn) will be utilised to reduce core retail debt.

Deals in pipeline

Staples sale to infuse ~INR1,500mn

PRIL currently holds ~39.5% stake in Staples Future Office Products (SFOPPL), a joint venture

between the company and Staples Asia Investment (a subsidiary of Staples, US). It

contributes ~INR700mn to the top line (FY11 total sales=INR1,750mn; net loss=INR175mn).

PRIL will offload this stake through put option which will lead to capital inflow of ~INR1.5bn;

this deal is likely to materialise by July end.

C.P.Toshniwal, CFO

"Six months ago I said I'd be

debt free. People don't believe

that and I want to prove that I'll

be debt free. So that's a mission.

If I can build businesses, I can

reduce debt too."

- Kishore Biyani

Pantaloon Retail


Insurance business deal subject to regulatory approvals

PRIL is looking to divest its stake in the insurance business subject to regulatory approvals.

It will complete the five year holding mandate in September 2012, post which it will be

permitted to sell its stake.

Future Supply Chain: Part stake sale likely

The company currently holds ~70% stake (balance ~26% held by Li & Fung) which it plans to

cut to 51%. FSC has a debt of ~INR1,250mn (sales in FY11 INR2,922mn; profit INR1.7mn).

~65% of its business is in-house (servicing PRIL logistics needs) which will fall to 50% next

year as FSC expands and PRIL consolidates. We do have a lot of non-core retail businesses.

Some of them are prime investments, which are good for exit.” – Rakesh Biyani

e-Zone and Home Town

PRIL is also looking for partners to hive off its stake in these arms.

Private brands continue to be large part of business

PRIL has significant private labels contribution coming from Fashion at Big Bazaar (FBB),

Central and Brand Factory. FBB contributes INR18bn to top line with 80% plus private

brands mix; it has 25 standalone stores and is currently at a stage where Pantaloons was 7-8

years ago. Central and Brand Factory together contribute INR22bn to the top line, with 30%

private brands mix. PRIL will continue to focus on its private brands sales post Pantaloons

sale to ABNL.

Expanding food business: Margin for improvement

Margin within the foods business is likely to improve as PRIL undertakes backward and

forward integration. For instance, in Mumbai, it bakes its own bread which has helped

improve margin (plans to replicate this bakery model in eight other cities). As margin in this

segment (currently ~4%) improves, PRIL’s overall margin will also improve. Foods business

has huge headroom for margin improvement as margin in Western countries is ~26%; can

get better with improvement in efficiencies and as scale benefits are exploited.

Customer loyalty programmes to drive growth

PRIL plans to focus on customer loyalty programmes and reduce ad spends. It has 5mn plus

customers in its payback facility (including 1.8mn Greencard Pantaloons members); 2.4mn

T-24 (Big Bazaar) card members. It hopes to cross the 10-mn mark of payback members by

March 2013.

Shoppers Stop (SSL) added 0.485mn members to the First Citizen loyalty programme in

FY12, crossing the 2.5-mn mark; members contribute significantly (70-75%) to overall

revenue. Especially during slowdown, loyal members play key sales driver insulating the

company from major impact.

Similarly, PRIL can benefit significantly from its loyalty members as it enables them to use

points earned from one format to be used across any other format.

"We do have a lot of non-core

retail businesses. Some of them

are prime investments, which

are good for exit.”

– Rakesh Biyani

"There are three kinds of

entrepreneurs - creators,

preservers and destroyers. I

consider myself to be both

creator and destroyer.

Preserving the status quo has

never been my cup of tea."

– Kishore Biyani

"Concentrate on regions, don't

spread everywhere and reduce

the number of variables. Bring

simplicity in thoughts and

business. These are my three big

advices."

– Kishore Biyani

“I think alliances, mergers,

partnerships are a way forward

and that should not be seen as

(an) exit."

– Kishore Biyani

Retail


Expansion to continue at robust rate

PRIL will not let debt weigh down its expansion plans. It plans to continue its expansion

spree, though at a slower pace of 1.5mn sq ft per annum (earlier guidance of 2mn sq ft per

annum).

Rakesh Biyani: to slash costs for easing cash crunch

Rakesh Biyani, who had withdrawn into background roles a year ago when professional

members were brought to the forefront in PRIL, has been promoted from director to joint

managing director from April 1, 2012. He has been entrusted with the daunting task of

keeping costs under check to be able to service ~INR1.7bn interest expense of every

quarter.

Outlook and valuations: Positive; maintain ‘BUY’

PRIL’s key businesses are FDI ready and we expect the company to be a key beneficiary of

FDI in retail because of its enviable stature and expansion plans. Although we like its

diversified mix of retail business and size, burgeoning debt, rapid expansion and higher

inventory days remain key concerns. We are enthused by the pick-up in deleveraging steps

by PRIL. The company now needs to refocus on its core retail business so that it can address

slow SSG The stock is trading at 24.2x and 17.6x FY13E and FY14E EPS, respectively. We

recommend ‘HOLD’ and rate it ‘Sector Underperformer’ on relative return basis.

Table 1: Comparative Valuation

Source: Company, Edelweiss research

** June ending

Chart 1: Slow SSS growth across segments


Company Market Mcap CAGR (%)

Price (INR) (INR bn) FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E FY12 FY13E FY14E FY12-14E

Retail

Pantaloon Retail** 165 38 4.1 6.8 9.4 40.0 24.2 17.6 9.9 6.4 6.1 2.8 3.8 4.3 50.6

Shoppers' Stop 299 25 2.3 4.8 8.1 129.6 62.8 36.7 26.2 19.1 12.7 3.7 7.3 11.4 87.9

Titan Industries 214 190 6.8 7.6 9.5 31.5 28.2 22.5 20.9 18.1 14.1 48.2 39.5 37.7 18.4

Retail - Mean 67.0x 38.4x 25.6x 19.0x 14.5x 10.9x 18.2 16.9 17.8 52.3

Diluted EPS (INR) P/E( x) EV/EBITDA(x) ROE (%)

(40.0)

(20.0)

0.0

20.0

40.0

60.0

Q3

FY

09

Q4

FY

09

Q1

FY

10

Q2

FY

10

Q3

FY

10

Q4

FY

10

Q1

FY

11

Q2

FY

11

Q3

FY

11

Q4

FY

11

Q1

FY

12

Q2

FY

12

Q3

FY

12

(%)

Value retailing Lifestyle retailing Home retailing

Rakesh Biyani, Joint MD

Pantaloon Retail


Chart 2: EBITDA margin expands YoY in Q3FY12E


Table 2: Presence across formats


Table 3: Retail expansion spree to continue


0.0

2.4

4.8

7.2

9.6

12.0

Q1

FY

10

Q2

FY

10

Q3

FY

10

Q4

FY

10

Q1

FY

11

Q2

FY

11

Q3

FY

11

Q4

FY

11

Q1

FY

12

Q2

FY

12

Q3

FY

12

(%)

EBITDA margin

Format (No. of stores) Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12

Pantaloons 48 48 53 54 59 59 64 65

BB & FB 185 191 197 204 205 198 204 204

Central & Brand factory 25 27 29 30 32 35 38 37

eZone 36 42 43 44 37 36 36 33

Home Town 10 11 11 12 11 14 15 17

KB's Fair Price 123 134 170 198 214 221 224 190

Format (sq ft area in millions) Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12

Pantaloons 1.24 1.25 1.45 1.5 1.74 1.78 1.94 1.97

BB & FB 7.35 7.5 7.86 8.14 8.19 8.12 8.36 8.46

Central & Brand factory 2.18 2.2 2.36 2.52 2.76 2.77 2.97 2.88

eZone 0.48 0.53 0.53 0.54 0.47 0.43 0.42 0.38

Home Town 0.99 1.11 1.11 1.17 1.03 1.24 1.24 1.28

KB's Fair Price 0.12 0.13 0.15 0.18 0.19 0.2 0.2 0.17

Others 0.89 0.65 0.71 0.79 1.12 1.14 1.17 1.19

Retail


Company Description

PRIL is a leading Indian retail company with presence across most sectors of organized retail.

The company, entered modern retail in 1997 with the opening of its department store

format Pantaloons. In 2001, PRIL launched Big Bazaar, a hypermarket chain, followed by

Food Bazaar, a supermarket chain. A five format company, two years back, it now operates

over 20 formats which include Central (seamless malls located in city centers), Collection I

(home improvement products), Depot (books, music, gifts and stationeries), aLL (fashion

apparel for plus-size individuals), Shoe Factory (footwear), and Blue Sky (fashion

accessories). It has recently launched its e-tailing venture, futurebazaar.com. PRIL has sold

its Pantaloons format to Aditya Birla Nuvo with effect from June 2012 (demerger to

complete by March 2013)

Investment Theme

The Indian retail landscape is evolving with interplay of several demographic and economic

factors. Despite the slowdown expected in real GDP growth in the near term, the long term

prospects backed by changing consumer behaviour in favour of larger discretionary spend,

has set the stage for a healthy growth in the retail space over the next five years. The big

opportunity lies in the growing share of organised retail with the growing trend among

consumers to allocate a larger share of income to consumption and gradual improvement in

lifestyle.

PRIL has established strong presence across multiple consumption categories in a bid to

capture maximum consumer wallet share. It has also successfully incubated allied

businesses derived from the retail business or which support the core retail business in

subsidiaries like Future Media, Future Logistics, Future Bazaar and Future Knowledge

Services. We believe PRIL has the ability to create significant value with its large scale of

operations and proven execution track record.

Key Risk

Slow revenue growth due to rollout delays and poor same store growth

A large number of retailers are facing delays in roll outs due to delays by developers. This is

a significant risk and can lead to cost overruns. The delays on account of other retailers

could also impact PRIL as malls will not be viable unless all tenants are tied in. The

company’s SSS growth as a whole have been falling steadily which remains key concern.

Pressure on margins due to competition

With increasing competition, catchment areas are shrinking and the PSFPAs are not scaling

up as expected. Coupled with this, the shortage of quality retail space leading to spiraling

rentals, underdeveloped supply chain, and rising employee costs, which could add to the

cost and impact the company’s margins.

Macro slowdown

Macro concerns could hamper domestic consumption trends and result in lower footfalls.

Rising share of debt

Going forward, the company will have to depend primarily on debt for funding growth.

Steep increase in cost of borrowing can impact the profitability of the company.


Pantaloon Retail

Financial Statements

Income statement (INR mn)

Year to June FY10 FY11 FY12E FY13E FY14E

Net revenue 89,261 110,123 120,689 117,779 130,663

Materials costs 63,549 79,010 85,991 83,623 92,771

Gross profit 25,712 31,113 34,698 34,156 37,892

Employee costs 3,940 4,883 5,238 5,229 5,749

Electricity expenses 1,308 1,831 2,052 2,120 2,483

Rent and lease expenses 6,315 7,474 8,690 8,362 9,146

Other expenses 3,833 4,840 5,310 5,182 5,749

Advertisement & sales costs 2,126 2,485 2,679 2,591 2,875

EBITDA 8,191 9,600 10,729 10,671 11,890

Depreciation & Amortization 2,123 2,675 3,440 3,076 3,386

EBIT 6,068 6,925 7,289 7,595 8,504

Other income 857 208 324 301 280

EBIT incl. other income 6,925 7,133 7,613 7,896 8,784

Interest expenses 3,913 4,288 6,277 5,685 5,754

Profit before tax 3,013 2,845 1,336 2,211 3,030

Provision for tax 582 948 441 730 1,000

Core profit 2,431 1,897 895 1,481 2,030

Basic shares outstanding (mn) 206 217 217 217 217

Basic EPS (INR) 11.8 8.7 4.1 6.8 9.4

Diluted equity shares (mn) 206 217 217 217 217

Diluted EPS (INR) 11.8 8.7 4.1 6.8 9.4

CEPS (INR) 22.1 21.1 20.0 21.0 24.9

Dividend per share (INR) 1.2 0.9 0.5 0.8 1.0

Dividend payout (%) 11.0 10.7 11.0 11.0 11.0

Common size metrics - as % of net revenues


Electricity expenses 1.5 1.7 1.7 1.8 1.9

Rent and lease expenses 7.1 6.8 7.2 7.1 7.0

Materials costs 71.2 71.7 71.3 71.0 71.0

Employee expenses 4.4 4.4 4.3 4.4 4.4

Advertising & sales costs 2.4 2.3 2.2 2.2 2.2

Other expenses 4.3 4.4 4.4 4.4 4.4

Depreciation 2.4 2.4 2.9 2.6 2.6

Interest expenditure 4.4 3.9 5.2 4.8 4.4

EBITDA margins 9.2 8.7 8.9 9.1 9.1

EBIT margins 6.8 6.3 6.0 6.4 6.5

Net profit margins 2.7 1.7 0.7 1.3 1.6

Growth ratios (%)


Revenues 40.8 23.4 9.6 (2.4) 10.9

EBITDA 22.6 17.2 11.8 (0.5) 11.4

PBT 39.4 (5.6) (53.0) 65.5 37.0

Net profit 73.0 (22.0) (52.8) 65.5 37.0

EPS 59.7 (25.9) (52.8) 65.5 37.0


Retail

Balance sheet (INR mn)

As on 30th June FY10 FY11 FY12E FY13E FY14E

Equity capital 1,108 1,818 1,818 1,834 1,834

Reserves & surplus 27,656 29,602 30,382 44,056 45,824

Shareholders funds 28,764 31,420 32,199 45,889 47,658

Minority interest (BS) 3,183 3,313 3,313 2,013 2,013

Secured loans 32,571 55,397 38,458 20,144 21,944

Unsecured loans 10,949 23,065 47,004 24,620 26,820

Borrowings 43,520 78,461 85,461 44,763 48,763

Deferred tax liability 1,102 1,555 1,555 1,555 1,555

Sources of funds 76,569 114,749 122,529 94,220 99,989

Gross block 30,868 40,260 50,260 44,376 52,376

Depreciation 4,400 6,787 10,227 13,302 16,689

Net block 26,468 33,473 40,033 31,074 35,687

Capital work in progress 3,044 3,446 3,000 2,500 2,250

Investments 9,098 12,967 12,967 12,967 12,967

Inventories 24,912 36,791 36,372 33,882 37,588

Sundry debtors 3,914 5,298 5,015 4,862 5,358

Cash and equivalents 2,865 5,520 5,267 1,767 1,529

Loans and advances 26,620 45,275 45,275 31,975 31,975

Total current assets 58,467 93,287 92,331 72,887 76,852

Sundry creditors and others 19,706 26,721 24,101 23,505 26,065

Provisions 802 1,702 1,702 1,702 1,702

Total current liabilities & provisions 20,508 28,424 25,803 25,207 27,767

Net current assets 37,959 64,863 66,528 47,680 49,085

Uses of funds 76,569 114,749 122,529 94,220 99,989

Book value per share (INR) 139.5 144.7 148.3 211.4 219.5

Free cash flow (INR mn)


Net profit 2,302 1,897 895 1,481 2,030

Add : Non cash charge 7,328 6,964 9,717 8,761 9,140

Depreciation 2,123 2,675 3,440 3,076 3,386

Others 5,205 4,288 6,277 5,685 5,754

Gross cash flow 9,630 8,860 10,612 10,242 11,170

Less: Changes in WC (2,339) 6,248 1,918 (14,048) 1,643

Operating cash flow 11,969 2,612 8,694 24,290 9,528

Less: Capex 4,923 9,392 9,555 (6,384) 7,750

Free cash flow 7,046 (6,780) (861) 30,674 1,778

Cash flow metrics


Operating cash flow 2,512 (10,873) 8,694 24,290 9,528

Investing cash flow (4,479) (16,687) (9,555) 16,784 (7,750)

Financing cash flow 2,806 30,216 608 (44,574) (2,015)

Net cash flow 839 2,656 (253) (3,500) (238)

Capex (4,923) (9,392) (9,555) 6,384 (7,750)

Dividends paid (296) (255) (115) (191) (261)

Share issuance/(buyback) 32 710 - 16 -


Pantaloon Retail

Profitability & efficiency ratios


ROAE (%) 9.0 6.3 2.8 3.8 4.3

ROACE (%) 9.6 8.2 6.9 8.0 10.1

Inventory day 96 102 110 105 105

Debtors days 14 15 15 15 15

Payable days 75 84 80 80 80

Cash conversion cycle (days) 35 33 45 40 40

Current ratio 2.9 3.3 3.6 2.9 2.8

Debt/EBITDA 5.3 8.2 8.0 4.2 4.1

Debt/Equity 1.5 2.5 2.7 1.0 1.0

Adjusted debt/equity 1.5 2.5 2.7 1.0 1.0

Interest coverage 1.6 1.6 1.2 1.3 1.5

Operating ratios


Total asset turnover 1.2 1.2 1.0 1.1 1.3

Fixed asset turnover 3.7 3.7 3.3 3.3 3.9

Equity turnover 3.3 3.7 3.8 3.0 2.8

Du pont analysis


NP margin (%) 2.7 1.7 0.7 1.3 1.6

Total assets turnover 1.2 1.2 1.0 1.1 1.3

Leverage multiplier 2.7 3.2 3.7 2.8 2.1

ROAE (%) 9.0 6.3 2.8 3.8 4.3

Valuation parameters


Diluted EPS (INR) 11.8 8.7 4.1 6.8 9.4

Y-o-Y growth (%) 59.7 (25.9) (52.8) 65.5 37.0

CEPS (INR) 22.1 21.1 20.0 21.0 24.9

Diluted PE (x) 14.0 18.9 40.0 24.2 17.6

Price/BV (x) 1.2 1.1 1.1 0.8 0.8

EV/Sales (x) 0.8 1.0 1.0 0.7 0.6

EV/EBITDA (x) 9.1 11.3 10.8 7.4 7.0

Dividend yield (%) 0.7 0.6 0.3 0.5 0.6

*Pantaloons format to be demerged by March 2013 with retrospective effect from June 2012


Company Absolute

reco

Relative

reco

Relative

risk

Company Absolute

reco

Relative

reco

Relative

Risk

Pantaloon Retail HOLD SU H Shoppers Stop BUY SP L

Titan Industries BUY SO L

RATING & INTERPRETATION

ABSOLUTE RATING

Ratings Expected absolute returns over 12 months

Buy More than 15%

Hold Between 15% and - 5%

Reduce Less than -5%

RELATIVE RETURNS RATING

Ratings Criteria

Sector Outperformer (SO) Stock return > 1.25 x Sector return

Sector Performer (SP) Stock return > 0.75 x Sector return

Stock return < 1.25 x Sector return

Sector Underperformer (SU) Stock return < 0.75 x Sector return

Sector return is market cap weighted average return for the coverage universe

within the sector

RELATIVE RISK RATING

Ratings Criteria

Low (L) Bottom 1/3rd percentile in the sector

Medium (M) Middle 1/3rd percentile in the sector

High (H) Top 1/3rd percentile in the sector

Risk ratings are based on Edelweiss risk model

SECTOR RATING

Ratings Criteria

Overweight (OW) Sector return > 1.25 x Nifty return

Equalweight (EW) Sector return > 0.75 x Nifty return

Sector return < 1.25 x Nifty return

Underweight (UW) Sector return < 0.75 x Nifty return


Pantaloon Retail

Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.

Board: (91-22) 4009 4400, Email: [email protected]

Vikas Khemani Head Institutional Equities [email protected] +91 22 2286 4206

Nischal Maheshwari Co-Head Institutional Equities & Head Research [email protected] +91 22 4063 5476

Nirav Sheth Head Sales [email protected] +91 22 4040 7499

Coverage group(s) of stocks by primary analyst(s): Retail

Pantaloon Retail, Shoppers Stop, Titan Industries

Distribution of Ratings / Market Cap

Edelweiss Research Coverage Universe

Rating Distribution* 104 60 18 183

* 1 stocks under review

Market Cap (INR) 114 58 11

Date Company Title Price (INR) Recos

Recent Research

04-Jun-12 Pantaloon

Retail

A right move;

EdelFlash

139 Hold

16-May-12 Pantaloon

Retail

Burgeoning debt takes a toll;

Result Update

147 Hold

02-May-12 Shoppers

Stop

Discounting growth;

Result Update

351 Buy

> 50bn Between 10bn and 50 bn < 10bn

Buy Hold Reduce Total

Rating Interpretation

Buy appreciate more than 15% over a 12-month period

Hold appreciate up to 15% over a 12-month period

Reduce depreciate more than 5% over a 12-month period

Rating Expected to


Retail

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