Pantaloon Retail

JP Morgan reiterates `Overweight’ rating on Pantaloon Retail (PRIL). Pantaloon reported net sales of Rs 1,660 crore (+20% y-o-y), EBITDA of Rs 180 crore (+30% y-o-y) and PAT of Rs 36.5 crore (+12% y-o-y) for Q4FY09 on a standalone basis. PRIL reported FY09 consolidated sales of Rs 7,670 crore (+31% y-o-y), EBITDA of Rs 500 crore (+71% y-o-y) and PAT of Rs 11.7 crore. Earnings were depressed primarily due to insurance and telecom business related losses. Most of the subsidiaries have achieved significant scale and are expected to break even next year. Incremental funding requirements for subsidiaries will be largely met by an equity stake sale with reduced investments by the parent company. Catalysts that could affect stock performance in the near term are:

1) Operating performance of subsidiaries and extent of investments being made by parent company in them,

2) Extent of equity dilution and de-leveraging, and

3) Any strategic alliances/partnerships.

JP Morgan believes PRIL, with its multi-format and multi-category strategy, reliable supply chain infrastructure and significant location advantage is a key beneficiary of the improving economic climate. They anticipate standalone earnings growth for Pantaloon to accelerate driven by improving sales growth trends, cost containment focus and benign competitive environment.

Stock Views on Axis Bank, Pantaloon Retail, Divis Laboratories

Angel Broking on Axis Bank - Target Rs 1024

Angel Broking has maintained its buy rating on Axis Bank with a target of Rs 1024 in its report.

"At the CMP, the stock is trading at 10.2x FY2011E EPS of Rs 73.9 and 2.0x FY2011E Adjusted Book Value (ABV) of Rs 379.1. Overall, given the reasonable mid-cycle valuations, we believe a medium-term investment perspective needs to be adopted to take advantage of the imminent upturn in GDP growth. From this perspective, we retain our preference for Private Banks such as Axis Bank, in light of their stronger core competitiveness. We believe the Bank deserves premium valuations on account of its attractive CASA franchise, multiple sources of sustainable fee income, strong growth outlook and A-list management. We maintain a Buy on the stock, with a Target Price of Rs 1,024, implying an upside of 35% from current levels," says Angel Broking's research report.

Angel Broking on Pantaloon Retail - Target Rs 301

Angel Broking has recommended a buy rating on Pantaloon Retail with a target of Rs 301 in its report.

"We believe that that future growth of the organised Retailing Sector in India would be led by Value Retailing, cascading effects of which would be witnessed in the Lifestyle and Home Retailing Segments as well albeit with a lag effect. PRIL continues to be our Top-pick in the Indian Retail Sector on account of being the largest Retail player in India and having presence across most product categories and price points. We are positive on PRIL as it has been able to sustain decent growth on a Standalone YTD basis despite the apathetic economic scenario."

"At Rs 270, the stock is trading at 17.3x FY2011E Earnings and 3x FY2011E P/BV. We have valued PRIL Standalone at Rs240. We have valued PRIL's stake in FCH, HSRIL and Future Bazaar at Rs31, Rs12 and Rs18, respectively. We recommend a Buy on PRIL with a target price of Rs 301," says Angel Broking's research report.

Karvy Stock Broking on Divis Laboratories - Target Rs 1260

Karvy Stock Broking has maintained its buy rating on Divis Laboratories with a target of Rs 1260 in its report.

"Revenues for the quarter have gone up by 9.4% to Rs 2.9 billion for the quarter. This is in line with lower traction in revenues on account of slow down in growth in CRAMS business. We believe the second half would be better than the first half. Operating margins of the company would be 42 % compared to 41.5 % in the corresponding quarter of the previous year. Profits for the quarter would be up by 7 % to Rs 1010 million. Divi's Labs will be a major beneficiary of the pharmaceutical outsourcing and will see greater traction in H2 FY 2010 and FY 2011. The company had provided lower tax on account of SEZ in FY 2008 and FY 2009 to the tune of Rs 400 million. This has been on account of the amendment being valid from FY 2010 as against retrospective effect. The company will now have to provide the same in the current year. We downgrade our multiple from 15.5x to 14x on account of higher tax outgo and impact on cash flows on account of MAT. We reduce our price target by 10 % to Rs 1260 based on 14x FY 2011E. We however maintain our 'BUY' rating on the stock, “ says Karvy Stock Broking's report.

Stock views on ICICI Bank, Pantaloon Retail, Axis Bank

Karvy Stock Broking on Axis Bank - Target of Rs 829

Karvy Stock Broking has maintained its buy rating on Axis Bank with a target price of Rs 829 in its research report.

"We have revised our Axis Bank earning estimates after a visit to the bank's senior management; we expect that the bank's credit growth would moderate to 31.5% (Y/Y) to Rs 1,146 billion from our earlier credit book estimate of Rs 1,226 billion in FY10. Net interest margin is estimated to shrink by 30 bps to 2.57% in FY10.The bank's core fee income growth momentum is expected to come down to 28% (Y/Y) in FY10 from 70% in FY08 and 50% in 9MFY09. The bank's management did not provide with any guidance or estimates on non-performing assets front; we expect 152% (Y/Y) rise in gross NPA in FY10 to Rs 21.5 billion and increased credit cost to 1.3% in FY10 from 0.71% in FY08 and 1.1% 9MFY09."

"We increase our earning estimates for FY09 by 5.0% to Rs 17.7 billion and reduce for FY10 by 9.6% to Rs 15.5 billion and reduce our target price by 29% to Rs 629 per share.We estimate the bank to record RoAE of 18.8% and 14.4% in FY09 and FY10 respectively. We re-iterate our BUY rating on the stock with a target price of Rs 629 at 2.2x adjusted book value FY10," says Karvy Stock Broking's research report.


Angel Broking on Pantaloon Retail - Target of Rs 439


Angel Broking has maintained its buy rating on Pantaloon Retail with a target price of Rs 439 in its research report.


"We are bullish on the long-term growth prospects of the Retail Sector despite the ongoing slowdown in the economy. Our Top Pick PRIL is the largest player in the Indian Retail Sector. We are positive on PRIL as it has been able to maintain its growth (YTD) at a healthy 31% on a Standalone basis and 34% on a consolidated basis despite the slowdown. We believe that PRIL Standalone would be able to meet our FY2009 and FY2010 Net Sales estimates of Rs 6,894 crore and Rs 8,492 crore, respectively. We estimate PRIL Standalone to clock Net Profit of Rs 154.6 crore and Rs 217.8 crore in FY2009 and FY2010, respectively.


On the bourses, the PRIL stock has witnessed significant correction in the past few months and is currently trading at attractive valuations and provides favourable risk-reward for the investors. We have valued PRIL's stake in FCH, HSRIL and Future Bazaar at Rs 33, Rs 13 and Rs 20, respectively. We maintain a Buy on the stock, with SOTP target price of Rs 439, translating into an upside of 73% from current levels," says Angel Broking's research report.


Sharekhan on ICICI Bank - Target of Rs 805

Sharekhan has maintained its buy rating on ICICI Bank with a price target of Rs 805 in its research report.

"As part of its strategy of focusing on capital preservation and improving asset quality, the bank does not intend to grow its balance sheet aggressively in the coming fiscal. It expects a balance sheet growth in mid single digits for FY2010, with the loan mix likely to shift further away from the retail segment."

"In view of the management, the pressure on the margins is likely to persist till H1FY2010 as the loan mix shifts away from the high yielding retail segment and a larger chunk of the wholesale deposits gets re-priced during the September-December 2009 period, paving the way for some margin expansion during H2FY2010."

"Despite the various concerns over the bank’s asset quality, its international business and the lack of triggers in the near term, we believe that the current valuations of the stock more than reflect the potential risks to the earnings. We maintain our Buy recommendation on the stock with a price target of Rs 805," says Sharekhan's research report.

Angel Broking views on Pantaloon Retail, Bosch, Zee News

Angel Broking on Pantaloon Retail - Target of Rs 239

Angel Broking has maintained its buy rating on Pantaloon Retail with a target price of Rs 239 in its research report.

"We are bullish on the long-term growth prospects of the Retail Sector despite the ongoing slowdown in the economy. Our Top Pick PRIL is the largest player in the Indian Retail Sector. We are positive on PRIL as it has been able to maintain its growth (YTD) at a healthy 31% on a Standalone basis and 34% on a consolidated basis despite the slowdown. We believe that PRIL Standalone would be able to meet our FY2009 and FY2010 Net Sales estimates of Rs 6,894 crore and Rs 8,492 crore, respectively. We estimate PRIL Standalone to clock Net Profit of Rs 154.6 crore and Rs 217.8 crore in FY2009 and FY2010, respectively.

On the bourses, the PRIL stock has witnessed significant correction in the past few months and is currently trading at attractive valuations and provides favourable risk-reward for the investors. We have valued PRIL's stake in FCH, HSRIL and Future Bazaar at Rs 33, Rs 13 and Rs 20, respectively. We maintain a Buy on the stock, with SOTP target price of Rs 239, translating into an upside of 73% from current levels," says Angel Broking's research report.


Angel Broking on Bosch - Target of Rs 3600

Angel Broking has maintained its buy rating on Bosch with a target price of Rs 3,600 in its research report.

"For 4QCY2008, Bosch India reported 13.5% yoy growth in Net Sales to Rs 974 crore, which was marginally below our expectation of Rs 994 crore. This came on back of 17% yoy decline in Auto segment while other businesses posted robust 33.1% growth. We maintain a Buy on the stock, with a target price of Rs 3,600 at which level the stock would trade at a P/E of 18x," says Angel Broking's research report.


Angel Broking on Zee News - Target of Rs 37

Angel Broking has recommended a buy rating on Zee News with a target price of Rs 37 in its research report.

"We have valued ZNL on DCF Methodology to capture long-term value creation from the Regional markets and the growing Subscription opportunity, particularly for Broadcasters. Moreover, ZNL's current Earnings and Cash flows do not capture full potential of its new businesses (these are under heavy investment mode), which we believe are likely to substantially bolster Profitability post attaining maturity."

"Assuming WACC of 12.3% and Terminal growth rate of 4%, our target price based on FY2010 estimates works out to Rs 37 at which the stock would trade at a P/E of 14.9x and EV/EBITDA of 8.1x, which is significantly below its historical average P/E band of 25-30x. We initiate coverage on the stock, with a buy recommendation implying potential upside of 28% from current levels," says Angel Broking's research report.

Stock Views on Pantaloon Retail, Everest Kanto, Jagran Prakashan, HT Media

Angel Broking on Pantaloon Retail - Target of Rs 284


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.


SKP Securities on Everest Kanto - Target of Rs 229


SKP Securities has recommended a buy rating on Everest Kanto Cylinder (EKC) with a target of Rs 229 in its December 1, 2008 research report. "EKC has planned a capacity expansion of 2,05,000 cylinders including the capacity for 5000 jumbo cylinders, industrial cylinders at Gandhidham with an estimated capital expenditure of Rs 650 million. EKC has made an aggressive capital expenditure plan in China, through EKC Industries (Tianjin) Co. Ltd, the company’s wholly owned subsidiary in China."


"At the current market price of Rs 140, the stock is trading at a P/E of 15.05x and 12.32x of FY09E and FY10E earnings of Rs 13.37 and Rs 16.34 respectively. We recommend BUY rating on the stock with a target price of Rs 229/- (63% upside) in 18 months implying a P/E multiple of 14x of FY10E earnings," says SKP Securities' research report.



Angel Broking on Jagran Prakashan - Target of Rs 70


Angel Broking has maintained its buy rating on Jagran Prakashan with a target price of Rs 70 in its November 28, 2008 research report. "Amid mounting problems for India’s print industry, a silver lining is starting to appear in the form of some easing in newsprint prices. Until now, newsprint prices, one of the largest cost factors for print media, had been rising since mid-2007 contributing to weakening profitability at most of India’s print media firms. Newsprint buyers at media houses say the situation is starting to become more favourable and they hope to drive down prices by USD 100-200 (Rs 4,990-9,980) per tonne when fresh contracts are signed in January."


"Currently, newsprint is available in the spot market at much lower prices than the listed price and buyers are taking that as a cue for lower prices in January. The average official price for imported newsprint in India for the current quarter is USD 960 per tonne. The cost of newsprint generally accounts for 55-65% of the total cost of a newspaper’s operation and a big surge, from USD 560 per tonne in early 2007 to USD 960, had sharply eaten into profitability of publishers, most of who resorted to reducing pages, copies printed or switching to inferior, domestic newsprint. Adding to their woes, an unexpectedly unfavourable exchange rate also dealt a blow as one dollar that could be bought for Rs 40.30 in March, now costs about Rs50, effectively raising the price of newsprint by another 20%. We believe this is a positive development for Print Media companies and maintain Buy on Jagran Prakashan with a target price of Rs 70," says Angel's research report.


Angel Broking on HT Media - Target of Rs 99


Angel Broking has maintained its buy rating on HT Media with a target price of Rs 99 in its November 28, 2008 research report. "Amid mounting problems for India’s print industry, a silver lining is starting to appear in the form of some easing in newsprint prices. Until now, newsprint prices, one of the largest cost factors for print media, had been rising since mid-2007 contributing to weakening profitability at most of India’s print media firms. Newsprint buyers at media houses say the situation is starting to become more favourable and they hope to drive down prices by USD 100-200 (Rs 4,990-9,980) per tonne when fresh contracts are signed in January."


"Currently, newsprint is available in the spot market at much lower prices than the listed price and buyers are taking that as a cue for lower prices in January. The average official price for imported newsprint in India for the current quarter is USD 960 per tonne. The cost of newsprint generally accounts for 55-65% of the total cost of a newspaper’s operation and a big surge, from USD 560 per tonne in early 2007 to USD 960, had sharply eaten into profitability of publishers, most of who resorted to reducing pages, copies printed or switching to inferior, domestic newsprint. Adding to their woes, an unexpectedly unfavourable exchange rate also dealt a blow as one dollar that could be bought for Rs 40.30 in March, now costs about Rs 50, effectively raising the price of newsprint by another 20%. We believe this is a positive development for Print Media companies and maintain Buy on HT Media with a target price of Rs 99," says Angel's research report.

Stock Views on Largecap Merchandise Koutons Retail, Pantaloon Retail

Edelweiss Capital on Pantaloon Retail

We believe with margin improvement from profitable merchandise, operational efficiencies, lower rentals kicking in, and the rapid pace of expansion, PRIL is an attractive bet. EBITDA margins improved 140bps on account of lower-than-proportionate increase in employee and other overheads. This is in line with the company’s effort to rationalise its employee cost and other selling and administration costs.

ICICI Securities on Koutons Retail

We remain positive on the asset-light business model of the company and believe the company will be able to meet its expansion targets. The net profit increased by 79.57% QoQ to Rs 19.46 crore in Q2FY09 on account of less than proportionate increase in fixed costs like interest and depreciation.We maintain our estimates for FY09 and FY10 as they are conservative to take care of the competitive scenario.

Srock Views on Pantaloon Retail, Bartronics, HDIL

MORGAN Stanley on Pantaloon Retail

MORGAN Stanley advises investors to accumulate Pantaloon Retail’s stock at current levels. The company reported stock selection guide (SSG) for value and lifestyle retailing at 14.1% and 8.2% year-on-year, respectively, in August. The average SSG for value retailing for the past three months is 12.2%, while for lifestyle retailing it is 11.5%. There were no store additions in home retail and SSG stood at 25.8% in August. Sales for the value and lifestyle retailing segments grew by 49% and 38% y-o-y, respectively. The ‘5 Din Mahabachat’ from August 13-17 generated sales of Rs 200 crore, and nearly 60 lakh footfalls were generated in Big Bazaar and Food Bazaar stores. The top six cities in revenue terms accounted for nearly 60% of the total ‘5 Din Mahabachat’ sales. The stock is trading at 14x FY09E earnings, adjusting for value of its subsidiaries Future Capital, Home Solutions, Future Media and Future Bazaar. Morgan Stanley expects Pantaloon to deliver an EPS CAGR of 56% for the next five years.

HDFC Securities on Bartronics

HDFC Securities initiates coverage on Bartronics India with a ‘buy’ rating. With 90% and 95% market share in smart card and radio frequency identification (RFID) segments, respectively, the company offers all automatic identification & data capture (AIDC) solutions under one roof. Its early entry into smart card manufacturing will help it to retain its dominance in the area. Bartronics is the only manufacturer of smart cards in the country. Its smart card capacity has already been booked for the next two years. It also has the capability to provide end-to-end AIDC solutions, which will help it to expand its order book and topline. The company’s revenues and profits are expected to witness a CAGR of 72% and 78% over FY08-FY10E. At the current market price, it is trading at 6.5x and 3.8x its FY09E and FY10E forward EPS, respectively. HDFC Securities has arrived at a discounted cash flow (DCF)-based target price of Rs 234 — an upside of 53% from current levels. While the bull case target price is Rs 339 (upside of 122%), the bear case target price is Rs 147 (downside of 4%) from current levels.

BNP Paribas on HDIL

BNP Paribas initiates coverage on Housing Development & Infrastructure (HDIL) with a counter-consensus ‘reduce’ rating. HDIL focuses on the lucrative Mumbai slum rehabilitation segment, which is characterised by high margins and high entry barriers. Slum rehabilitation projects account for 34.5% of its land bank. However, funding constraints and delays due to state elections next year are likely to slow its progress. The company’s target of rehabilitating 15,000 slum tenements annually starting in FY09 is ambitious, since the best it has done so far is 3,000 tenements annually. BNP Paribas’ channel checks with slum dwellers indicate that the company is likely to face several roadblocks, especially in the Mumbai airport slum redevelopment project. HDIL’s earnings stream is highly volatile and there are significant risks in achieving the estimates of the market, which is yet to factor in execution delays. BNP Paribas would like to gain more comfort on the company’s ability to scale up its operations and execution before turning positive.