Financial Daily from THE HINDU group of publications
Saturday, Feb 21, 2004
Pantaloon Retail touches 52-week high
Mumbai , Feb. 20
THE scrip of Pantaloon Retail, which has been on an upward trend, touched a 52-week high of Rs 307 today. The share is expected to appreciate by 30-40 per cent from the current level, according to brokers and analysts.
Fund buying on the scrip is also very active. Fund managers believe that it is the best player in the retail segment. Mr Jayesh Shroff, Fund Manager Equity, Bank of Baroda Mutual Fund, said that the company has demonstrated expertise in ensuring high footfalls and converting them to sales.
Ms Sohini Andani, Equity Researcher, LKP Securities, said that the outlook on the scrip continues to be positive and that it remains undervalued.
"The performance of the company is good; it recorded Rs 11 crore half-yearly profit on an annual expectation of Rs 22 crore. It could very well now outperform the expectation."
She added: "They have a greater number of stores and have been able to lease property in good locations at reasonable rates. Subsequently, lease rentals have gone up in these areas and competitors are paying much higher rents."
Analysts concede that margins in the industry are low. Though margins are expected to increase from the current 8-9 per cent levels, they will hover around 13 per cent.
In the low margin business, stock turnover is the key to success. Big Bazaar, the high-volume, low-cost shopping business of Pantaloon Retail has got this mantra right, they added.
"The rally on the scrip started recently. Now it is on the radar of many large broking houses and the price is bound to go northwards," said Mr Rajesh Shah, a broker.
"Initially there were concerns about the management team, but it is not relevant anymore. The business vision of the management team has been proved, anything else is speculative," said Mr Pankaj of a corporate broking house.
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