Monday, December 1, 2008

Buy Pantaloon Retail, target of Rs 284: Angel

(My Original Blog Post: -*
Angel Broking has recommended a buy rating on Pantaloon Retail with a target price of Rs 284 in its December 1, 2008 research report. "Indian Retail Industry is a derivative of the growing economy, changing demographics and preferences of the Indian consumers. According to industry and our estimates, Nominal GDP growth of 12% over CY2008-CY2010E coupled with estimated growth of 7% in the Real private final consumer expenditure (PFCE) of Indian consumers will drive growth of the Total Indian Retail industry to reach US USD 640 billion by CY2010E. We estimate Organised Retail in India to grow at a CAGR of 35% over CY2008-10E to USD 46 billion. Few key drivers of growth of Organised Retail in India are increase in disposable income, growing aspiring middle class segment, increase in investments in Retail, Tier-II and III cities which would drive long-term growth of Organised Retail. Key challenges facing Organised Retail in India are acceptance of Organised Retail by the Traditional retailers (which is leading to tougher regulatory measures by the government), supply chain inefficiencies, high real estate costs and high execution risks in terms of store rollouts."

"Pantaloon Retail (PRIL) is our top pick in the sector as we believe that the company has competitive advantages over its peers in terms of its presence across consumption and price points of Indian consumers, has pan-India presence and lower execution risks. At Rs 210, the stock is trading at 14.2x FY2010E Earnings and 1.8x FY2010E P/BV. We Initiate Coverage on PRIL with a Buy recommendation and SOTP target price of Rs 284," says Angel's research report.


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