Pantaloon Retail (PRIL) reported poor performance for 3QFY2011. The company reported top-line growth of 17.6% yoy to `2,812cr. Value retailing recorded same-store-sales of 10.3% during the quarter, while lifestyle retailing stood at 10.2%. During the quarter, EBITDA margin declined by 30bp to 8.8% (9.1%). PRIL's presence across price points and categories places it in a better position than its peers. We maintain our Buy recommendation on the stock.
Retail space expansion on track: In 3QFY2011, PRIL added ~0.68mn sq. ft. of retail space, taking the total space to ~14.8mn sq. ft. We believe the company’s retail space expansion is on track, considering the company’s plan to add 1.2mn–1.5mn sq. ft. in 2HFY2011. Retail space expansion was skewed towards the value-retailing format, which accounted for ~55% of the retail space addition during 3QFY2011. We believe improved consumer sentiment coupled with retail space addition bodes well for PRIL in the long run.
Outlook and valuation: PRIL is better placed than its peers on account of having a presence across price points and categories. Apart from positives like on-track retail space expansion and revival in consumer sentiment, we believe the company's restructuring initiatives would enable it to enhance its focus on different segments along with providing it a good opportunity of value unlocking. At `242, the stock is trading at 15.6x FY2013E earnings and 1.2x FY2013E P/BV.
We maintain our Buy view on the stock with an SOTP target price of `332.
We maintain our Buy view on the stock with an SOTP target price of `332.
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