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Accumulate
PANTALOON RETAIL INDIA PVT. LTD.,
Annual Coverage Report
05, Jan’2011
EXECUTIVE SUMMARY
Khalida Raffath  Pantaloon Retail (India) Limited, is India’s leading retailer that operates
multiple retail formats in both the value and lifestyle segment of the
Khalida.raffath@yahoo.co.in Indian consumer market.

 PRIL operates over 16 million square feet of retail space, has over 1000
CMP 378.20
stores across 73 cities in India and employs over 30,000 people.
Target Price 401.97
Upside 6.28%  PRIL to invest capex of around 21 Cr. for the next 3 years and the fund
will be used for adding 15-million sq.ft. retail space into its portfolio by
2014.
Market Data
Sector Retail  In the next 3 yrs The Govt. Of India will allow Foreign Direct
BSE 523574 Investments (FDI) in Multi-brand retail.
NSE PANTALOONR
 PRIL board has approved rising up to Rs 750 Cr via Qualified
Reuters PART.BO
institutional placement (QIP).
Bloomberg PF@IN
ISIN Demat INE623B01027  PRIL intends to set up 155 Big Bazaar stores by 2014, raising its total
Face Value 2.00 network to 275 stores.
Book Value 146.68
52 week H/L 527.90-338.70  PRIL has transferred its value retail business to its wholly own
No. of shares o/s 19.61 Cr. subsidiary, Future Value Retail Ltd.
Beta 1.11
Market Cap.(Rs. Cr) 7416.50  Pantaloon retail merged the home solutions business of its subsidiary,
Avg. Volume 70985 Home Solutions Retail (India) Limited (HSRIL) with itself.
Sensex 19521.25
Free Foat (Cr.) 4358  The Company has recorded growth in both the top line as well as in
bottom line despite the transferring of value retail business operations.

 PRIL had posted a consolidate turnover of Rs 9786.94 Cr in 2009-10 as

compared to Rs 7669.04 Cr. last year representing an increase of 28%.

 It posted a consolidated net profit of Rs 67.49 Cr, as against Rs 10.07 Cr

the year-ago period which is increased by 51.1% for the year.

 The consolidated EBITDA for FY 2009-10 is Rs 952.23 Cr, compared to

Rs 609 Cr, in FY 2008-09.

BSE India share index

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Key Financials
Y/E June (Rs Cr) FY 2009 FY 2010 FY 2011E FY 2012E FY 2013P FY 2014P FY 2015P

Net Sales 7669.04 9786.94 12196.12 15648.48 19500.54 23715.82 29717.59

% Change 31% 28% 25% 28% 25% 22% 25%
Net Income 10.10 67.49 206.64 92.04 315.96 378.19 187.76
Net Income Margin (%) 0.1% 0.7% 1.7% 0.6% 1.6% 1.6% 0.6%
EBITDA Margin (%) 7.8% 9.6% 9.5% 7.6% 9.2% 9.2% 7.4%
EPS (Rs) 0.63 3.44 10.54 4.69 16.11 19.29 9.57
P/E(×) 60.47 10.99 35.89 80.58 23.47 19.61 39.50
P/BV(×) 2.43 2.58 2.36 1.51 1.08 0.85 0.66
RoE (%) 0.004 0.023 0.066 0.019 0.046 0.043 0.017
RoCE (%) 0.05 0.07 0.07 0.05 0.07 0.07 0.06
EV/Sales (×) 1.07 0.84 0.67 0.53 0.42 0.35 0.28
EV/EBITDA 13.50 8.63 7.04 6.85 4.53 3.76 3.73

Synopsis:
Revenues
Consolidated Total revenue for the year 2009-10 was reported to Rs 9913 Cr, as compared to Rs
7764.8 Cr in FY 2008-09, representing a growth percentage of 27.7% because of the improving
economic scenario and consumption growth. The home retail business, which was languishing
with an 11 per cent fall in revenues the previous year, saw 12 per cent growth in FY10. The
value retail business maintained a steady 9.5 per cent growth and Lifestyle business saw a 14%
growth from 6% growth last year. However the net sales fell by 3% from last year to continued
year of global economic crisis. So, while calculating the estimated sales I have decreased net
sales by 3% on y-o-y basis.

Expenses
Consolidated Cost of sales increased from FY 2008-09 Rs 7764.8 Cr to Rs 6682.84 Cr
representing a growth of 30.33%. Depreciation costs increased from Rs 206.57 Cr last year to Rs
278.32 Cr present year and it will continue to remain higher due to the further expansion of
stores. Interest & Financial charges outflow has increased from Rs 418.54 Cr in 2008-09 to Rs
493.38 Cr in 2009-10. The increase in interest and financial charges is on account of HSRIL
Merger impact and additional borrowing for funding the growth plans of the company and in
future it can be controlled by better working capital management. For calculating the estimated
expenses I have increase it by 0.50% y-o-y basis because to bring in new customers and
acquiring larger share the company adopts new approaches to understand customers and for
advertising strategies.
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Profitability
The consolidated EBIDTA for FY 2009-10 is Rs 952.24 Cr, compared to Rs 609 Cr in FY 2008-09.
The consolidated PAT for FY 2009-10 is Rs 76.35 Cr, compared to a loss of Rs 7.46 Cr in FY 2008-
09. Profit after minority interest increased from Rs 10.07 Cr in FY 2008-09 to Rs 67.49 Cr in FY
2009-10, representing an increase of 570%. With the opening up of FDI, foreign players along
with new domestic players will enter in the near future, enhancing the modern retail market
which is currently 5%-7% penetrated, because of this the company will continue with an
upward trends in top-line as well as in bottom line in future also.

Forward Plans
(i) The company has planned to add around 2.5 million to 3.5 million square feet of
space during the forthcoming year and to maintain this pace for the next two to
three years.
(ii) The company has planned to complete the initiative of concentrating in pure
retail play and would be coming up with few more approvals to demerge / sale /
transfer the other non-retail non-core businesses.
(iii) Pantaloon also announced plans to raise money through the sale of shares or
convertible warrants for funding its expansion and diversification plans.

Risk & Concerns

The external environment and economy poses the main risk to the company in the form of
another downturn. Also, increasing inflation is considered a threat which would increase overall
input cost, as well as, conversion costs. Currently, with the turnaround in the economy, rising
interest and people cost poses a business risk and needs to be monitored.

Valuation Methodology
DCF Valuation method has been used for arriving at the fair value of Pantaloon Retail India Pvt.
Ltd., as explained below:

Assumptions:
 Risk Free Rate (Rf) of 8.1%, based on 10-year Government Bond Rate.

 Beta (β) of 1.11, calculated using slope function.

 Market Return Rate (Rm) of 2.6%, based on Sensex returns of 18-years period
from Sep-1992 to Dec-2010 CAGR.

Based on above and using Capital Asset Pricing Model (CAPM), I have arrived at a cost of Equity
of 14% and a WACC of 11.15%.
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DCF Calculation
Rs in Crores 2011E 2012E 2013P 2014P 2015P
EBITDA 1166.93 1200.28 1815.53 2188.66 2203.00
EBIT 820.79 757.02 1263.93 1518.51 1364.12
(-) Cash Taxes @35% (287.28) (264.96) (442.38) (531.48) (477.44)
Tax Effected EBIT 533.51 492.07 821.56 987.03 886.68
(+) Depreciation & Amortization 346.14 443.25 551.60 670.15 838.88
(-) Capital Expenditure (700) (700) (700) (700) (700)
(+/-) Changes in net working Capital (795.87) (1079.81) (1353.86) (1327.03) (1785.28)
Unlevered Free Cash Flow (FCF) (616.22) (844.49) (680.70) (369.85) (759.72)
WACC@ 11.15%
NPV of Unlevered FCF @ 11.15% (2423.92)

EBITDA Multiple Method

Terminal Value Undiscounted Discounted Implied Perpetual Growth
Rate
EBITDA Multiple 6.00× 13217.99 7.792.04 4%
8.50× 18725.49 11038.72 6%
DCF Range(Implied Enterprise Value) 5368.12 – 8614.80
Equity Value 4636.00 – 7882.68
Implied Price Per Share 236.41 – 401.97

DDF Sensitivity Analysis

Terminal EBITDA Multiple

8.0x 9.0x 10.0x

9.0% 416.36 489.37 562.38

WACC

10.0% 393.53 463.28 533.04

11.0% 371.96 438.63 505.29

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Financial Statement

Pantaloon Retail (India) Limited

Financial Summary
(All figures in Crores, except per share data)
Actual Estimated Projected
Fiscal 2008 2009 2010 2011E 2012E 2013P 2014P 2015P
Total Revenue 5,866.50 7,764.80 9,913.00 12,328.48 15,787.46 19,646.47 23,869.05 29,878.48
% Growth 64.5% 32.4% 27.7% 24.4% 28.1% 24.4% 21.5% 25.2%
Gross Profit 1,957.20 2,637.55 3,230.16 4,061.56 5,403.68 6,428.37 7,912.27 10,307.52
% Growth 63.0% 34.8% 22.5% 25.7% 33.0% 19.0% 23.1% 30.3%
Gross Profit Margin 33.4% 34.0% 32.6% 32.9% 34.2% 32.7% 33.1% 34.5%
EBITDA 326.49 609.00 952.23 1,166.93 1,200.28 1,815.53 2,188.66 2,203.00
% Growth 43.4% 86.5% 56.4% 22.5% 2.9% 51.3% 20.6% 0.7%

EBITDA Margin 5.6% 7.8% 9.6% 9.5% 7.6% 9.2% 9.2% 7.4%
EBIT 208.28 402.43 673.91 820.79 757.02 1,263.93 1,518.51 1,364.12
% Growth 16.1% 93.2% 67.5% 21.8% (7.8)% 67.0% 20.1% (10.2)%

EBIT Margin 3.6% 5.2% 6.8% 6.7% 4.8% 6.4% 6.4% 4.6%
Net Income 21.93 10.07 67.49 206.64 92.04 315.96 378.19 187.76
#
% Growth (38.3)% (54.1)% 570.2% 206.2% (55.5)% 243.3% 19.7% (50.4)%
Net Income Margin 0.4% 0.1% 0.7% 1.7% 0.6% 1.6% 1.6% 0.6%

Diluted EPS 1.45 0.63 3.44 10.54 4.69 16.11 19.29 9.57

% Growth (43.7)% (56.9)% 450.2% 206.2% (55.5)% 243.3% 19.7% (50.4)%

Actual 2010
Rs %
Cash & Equivalents 286.45 – Total Debt / Total 89.8%
(Closing bal.) Capitalization
Total Debt / EBITDA 1.0x
Total Debt 660.79 0.6% Net Debt / EBITDA 0.7x

Minority Interest 318.30 29.2% S&P Bond Rating AA-

Total Stockholders' 110.75 10.2% Moody's Bond Aa3
Equity Rating
Total Capitalization 1,089.84 100.0% Fitch Ratings A-
Note: Fiscal year ends June 30 of the next year.
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Pantaloon Retail (India) Limited

Income Statement
(All figures in crores, except per share data)
Actual Estimated Projected
Fiscal 2009 2010 2011 2012 2013 2014 2015
Revenue
Net Sales 7,669.04 9,786.94 12,196.12 15,648.48 19,500.54 23,715.82 29,717.59
Other Income, net 95.76 126.06 132.36 138.98 145.93 153.23 160.89

Total Revenue 7,764.80 9,913.00 12,328.48 15,787.46 19,646.47 23,869.05 29,878.48

Cost of Sale(COGS) (5,127.25) (6,682.84) (8,266.92) (10,383.78) (13,218.10) (15,956.77) (19,570.96)
Gross Profit 2,637.55 3,230.16 4,061.56 5,403.68 6,428.37 7,912.27 10,307.52
Dep. & Amort. (206.57) (278.32) (346.14) (443.25) (551.60) (670.15) (838.88)
Operating, SG&A Exp. (2,028.55) (2,277.93) (2,894.63) (4,203.40) (4,612.84) (5,723.61) (8,104.52)
Operating Income (EBIT) 402.43 673.91 820.79 757.02 1,263.93 1,518.51 1,364.12
Interest Expense (418.54) (493.38) (482.63) (594.98) (757.18) (915.79) (1,054.12)
(Finance charges)
Pre-Tax Income (16.11) 180.53 338.15 162.04 506.75 602.72 310.00
Income Taxes 10.25 (107.30) (118.35) (56.72) (177.36) (210.95) (108.50)
Earlier year's Income (0.30) 3.17 (3.17) (3.17) (3.17) (3.17) (3.17)
tax
Share in loss of (5.84) (6.31) (6.31) (6.31) (6.31) (6.31) (6.31)
associated co.
Goodwill written (1.08) - - - - - -
back/written off
Profit on sale of - - - - - - -
subsidiary/joint venture
Prior period items (1.30) (0.05) (1.00) (1.00) (1.00) (1.00) (1.00)
Minority Interest 24.45 (2.55) (2.68) (2.81) (2.95) (3.10) (3.25)

Net Income 10.07 67.49 206.64 92.04 315.96 378.19 187.76

Diluted Shares O/S 16.10 19.61 19.61 19.61 19.61 19.61 19.61
Diluted Earnings per 0.63 3.44 10.54 4.69 16.11 19.29 9.57
Share
EBITDA 609.00 952.23 1,166.93 1,200.28 1,815.53 2,188.66 2,203.00
EBITDA Margin 8% 10% 9% 8% 9% 9% 7%
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Pantaloon Retail (India) Limited

Balance Sheet
(All figures in crores, except per share data)
Actual Estimated Projected
Fiscal 2009 2010 2011 2012 2013 2014 2015
ASSETS
Current Assets
Cash & Equivalents 202.54 286.45 200.00 200.00 200.00 200.00 200.00
Sundry Debtors 306.61 391.43 487.79 625.86 779.93 948.52 1,188.56
Inventories 2,191.25 2,491.18 3,036.38 3,756.99 4,710.06 5,598.51 6,759.33
Loans & Advances 1,910.55 2,661.95 3,317.22 4,256.23 5,303.95 6,450.47 8,082.89
Other Current Assets 12.16 15.71 19.58 25.12 31.30 38.07 47.70
Total Current Assets 4,623.11 5,846.72 7,060.97 8,864.20 11,025.24 13,235.56 16,278.48
Net PPE 2,200.93 2,646.81 3,000.67 3,257.42 3,405.82 3,435.67 3,296.79
Capital work-in-progress 429.72 304.38 379.31 486.68 606.48 737.58 924.24
Investments 897.81 909.77 1,133.72 1,454.64 1,812.72 2,204.56 2,762.47
Other Assets and 2.49 - - - - - -
Deferred Charges
TOTAL ASSETS 8,154.06 9,707.68 11,574.67 14,062.95 16,850.26 19,613.37 23,261.98
LIABILITIES
Current Liabilities
Current Liabilities 1,351.94 1,970.63 2,455.72 3,150.87 3,926.49 4,775.25 5,983.73
Provisions 52.99 80.17 99.90 128.18 159.74 194.27 243.43
Total Current Liabilities 1,404.93 2,050.80 2,555.63 3,279.05 4,086.23 4,969.52 6,227.16
Long-Term Debt - 3,285.99 3,257.13 4,352.04 4,352.04 4,352.04 4,352.04 4,352.04
Secured loans
Unsecured Loans 572.27 1,094.91 1,094.91 1,094.91 1,094.91 1,094.91 1,094.91
Deferred Income Taxes 4.02 110.17 110.17 110.17 110.17 110.17 110.17
& Other
Minority Interest 384.59 318.30 318.30 318.30 318.30 318.30 318.30
TOTAL LIABILITIES 4,246.87 4,780.51 5,875.42 5,875.42 5,875.42 5,875.42 5,875.42
SHAREHOLDERS' EQUITY
Common Stock - Share 107.59 110.75 110.75 110.75 110.75 110.75 110.75
capital
Share Application Money 44.96 16.42 16.42 16.42 16.42 16.42 16.42
Equity Warrants 22.88 122.88 122.88 122.88 122.88 122.88 122.88
Share capital (Pending - 64.66 - - - - -
allotment)
Reserve & Surplus 2,326.83 2,561.66 2,893.57 4,658.42 6,638.56 8,518.38 10,909.35
TOTAL SHAREHOLDERS' 2,502.26 2,876.37 3,143.62 4,908.47 6,888.61 8,768.43 11,159.40
EQUITY
TOTAL LIABILITIES & 8,154.06 9,707.68 11,574.67 14,062.94 16,850.26 19,613.37 23,261.98
SHAREHOLDERS' EQUITY
8 For Private Circulation

Pantaloon Retail (India) Limited

Cash Flow Statement
(All figures in crores, except per share data)
Estimated Projected
Fiscal 2011 2012 2013 2014 2015
Cash From Operating Activities:
Net Income 206.64 92.04 315.96 378.19 187.76
Plus: Depreciation & Amortization 346.14 443.25 551.60 670.15 838.88
Changes in Working Capital:
(Increase)/Decrease in Sundry Debtors (96.36) (138.08) (154.06) (168.59) (240.04)
(Increase)/Decrease in Inventories (545.20) (720.61) (953.07) (888.45) (1,160.82)
(Increase)/Decrease in Other Current Assets (3.87) (5.54) (6.18) (6.77) (9.63)
(Increase)/Decrease in Loans & Advances (655.27) (939.01) (1,047.72) (1,146.51) (1,632.42)
Increase/(Decrease) in Provisions 485.09 695.14 775.62 848.76 1,208.47
Increase/(Decrease) in Current Liabilities 19.73 28.28 31.55 34.53 49.16
Total Change in Working Capital (795.87) (1,079.81) (1,353.86) (1,327.03) (1,785.28)
Total Cash From Operating Activities (243.09) (544.52) (486.30) (278.69) (758.63)
Cash From Investing Activities:
(Increase)/Decrease in Capital work in 74.93 107.37 119.80 131.10 186.66
progress
(Increase)/Decrease in Investments (223.95) (320.92) (358.08) (391.84) (557.91)
(Increase)/Decrease in Capital Expenditures (700.00) (700.00) (700.00) (700.00) (700.00)
Total Cash From Investing Activities (849.02) (913.55) (938.28) (960.74) (1,071.25)
Cash From Financing Activities:
Issuance of Common Stock - - - - -
Common Stock Dividends (15.69) (16.47) (17.30) (18.16) (19.07)
Net (Purchase) / Reissuance of Treasury - - - - -
Stock
Cash Available / (Required) Before Debt (1,107.80) (1,474.55) (1,441.88) (1,257.59) (1,848.95)
Debt Borrowing / (Repayment) 1,021.35 1,474.55 1,441.88 1,257.59 1,848.95
Total Cash From Financing Activities 1,005.66 1,458.08 1,424.58 1,239.43 1,829.89
Beginning Cash Balance 286.45 200.00 200.00 200.00 200.00
Change in Cash (86.45) - - - -
Ending Cash Balance 200.00 200.00 200.00 200.00 200.00
Average Cash Balance 243.23 200.00 200.00 200.00 200.00
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Financial Ratios
Pantaloon Retail (India) Limited
Financial Ratios
(All figures in crores, except per share data)
Actual Estimated Projected
Fiscal 2009 2010 2011 2012 2013 2014 2015
Price Multiple
P/E Ratio 60.47 10.99 35.89 80.58 23.47 19.16 39.50

Price-to-Book Ratio 2.43 2.58 2.36 1.51 1.08 0.85 0.66

Price-to-Sales Ratio 0.79 0.76 0.61 0.47 0.38 0.31 0.25

Price-to- Cash Flow Ratio 10.00 7.79 6.36 6.18 4.09 3.39 3.37

Liquidity Analysis Ratios

Current Ratio 3.29 2.85 2.76 2.70 2.70 2.66 2.61

Quick Ratio 1.73 1.64 1.57 1.56 1.55 1.54 1.53

Net Working Capital Ratio 0.42 0.39 0.37 0.36 0.36 0.35 0.34

Profitability Analysis Ratios

Gross Profit Margin 0.34 0.33 0.33 0.34 0.33 0.33 0.34

Net Profit Margin 0.001 0.007 0.017 0.006 0.016 0.016 0.006

Return on Asset (ROA) 1.04 1.10 1.15 1.22 1.26 1.30 1.39

Return on Equity (ROE) 0.004 0.023 0.066 0.019 0.046 0.043 0.017

Return on Capital Employed 0.05 0.07 0.07 0.05 0.07 0.07 0.06
(ROCE)

Return on Investment (ROI) 0.50 0.75 0.80 0.58 0.77 0.76 0.55

Earnings Per Share (EPS) 0.63 3.44 10.54 4.69 16.11 19.29 9.57

Activity Analysis Ratios

Assets Turnover Ratio 1.04 1.10 1.15 1.22 1.26 1.30 1.39

Inventory Turnover Ratio 2.59 2.85 2.99 3.06 3.12 3.10 3.17
10 For Private Circulation

Capital Structure Analysis

Cost of Debt 0.11 0.11 0.09 0.11 0.14 0.17 0.19

Debt to Equity Ratio 1.70 1.66 1.87 1.20 0.85 0.67 0.53

Interest Coverage Ratio 0.96 1.37 1.70 1.27 1.67 1.66 1.29

Market Value

Market Cap 6089.02 7416.50 7416.50 7416.50 7416.50 7416.50 7416.50

Book value per share 155.42 146.68 160.31 250.30 351.28 447.14 569.07

Dividend Per share 0.60 0.80 0.80 0.84 0.88 0.93 0.97

Cash Flow Indicator

Operating cash flow to sales 0.09 0.05 0.02 0.03 0.02 0.01 0.03

Growth Percentages

Total Operating Income 0.93 0.67 0.22 (0.08) 0.67 0.20 (0.10)

EBITDA 0.87 0.56 0.23 0.03 0.51 0.21 0.01

EBIT 0.93 0.67 0.22 (0.08) 0.67 0.20 (0.10)

Net Profit (0.54) 5.70 2.06 (0.55) 2.43 0.20 (0.50)

Sales 0.31 0.28 0.25 0.28 0.25 0.22 0.25

Dividend Policy Ratio

Dividend Yield 0.002 0.002 0.002 0.002 0.003 0.003 0.003

Dividend Payout Ratio 0.96 0.23 0.08 0.18 0.05 0.05 0.10
11 For Private Circulation

Graphs

Total Revenue Growth Trends

35,000.00 70.0%
30,000.00 60.0%
25,000.00 50.0%

Percent
Rs Cr.

20,000.00 40.0%
15,000.00 30.0%
10,000.00 20.0%
5,000.00 10.0%
- 0.0%

Year
Total Revene % Growth

Gross Profit and Gross Profit Margin Trends

12,000.00 35.0%

10,000.00 34.5%

34.0%
8,000.00

Percentage
33.5%
Rs Cr.

6,000.00
33.0%
4,000.00
32.5%
2,000.00 32.0%

- 31.5%
2008 2009 2010 2011E 2012E 2013P 2014P 2015P
Year
Gross Profit Gross Profit Margin
12 For Private Circulation

EBITDA AND EBITDA Margin Trends

2,500.00 12.0%
10.0%

Percentage
2,000.00
Rs Cr.

8.0%
1,500.00
6.0%
1,000.00
4.0%
500.00 2.0%
- 0.0%
2008 2009 2010 2011E 2012E 2013P 2014P 2015P
Years
EBITDA EBITDA Margin

EBIT & EBIT Margin Trends

1,600.00 8.0%

1,400.00 7.0%

Percentage
Rs Cr.

1,200.00 6.0%

1,000.00 5.0%

800.00 4.0%

600.00 3.0%

400.00 2.0%

200.00 1.0%

- 0.0%
Year
2008 2009 2010 2011E 2012E 2013P 2014P 2015P
EBIT EBIT Margin
13 For Private Circulation

Net Income & Net Income Margin Trend

400.00 1.8%
350.00 1.6%
300.00 1.4%
1.2%

Percentage
250.00
1.0%
Rs Cr.

200.00
0.8%
150.00
0.6%
100.00 0.4%
50.00 0.2%
- 0.0%

Year
Net Income Net Income Margin

Peer Group Comparison

(All figures in Rs cr, except per share data)
Face
Name of the Co’s CMP (Rs.) Market Cap. P/E(×) Sales Volume
Value

Pantaloon Retail India 378.20 7416.50 10.99 2.00 9786.94 132303

Vishal Retail Ltd. 32.50 72.80 -0.17 10.00 269.42 10014

Shopper Stop Ltd. 768.00 2833.92 51.92 10.00 454.52 10185

Trent Ltd 945.40 2741.66 47.10 10.00 182.80 1500

Provogue (India) Ltd 64.25 735.02 25.73 2.00 142.58 41197

14 For Private Circulation

Company Overview
Pantaloon Retail (India) Limited, is India’s leading
retailer that operates multiple retail formats in both share holding Pattern (%)
the value and lifestyle segment of the Indian As on Sep'10

consumer market. Headquartered in Mumbai

Promoters
(Bombay), the company operates over 16 million 12.29
square feet of retail space, has over 1000 stores
FII
across 73 cities in India and employs over 30,000 18.53 44.78
people.
DII
The company’s leading formats include Pantaloons, a
chain of fashion outlets, Big Bazaar, a uniquely Indian 24.4
Others
hypermarket chain, Food Bazaar, a supermarket
chain, blends the look, touch and feel of
Indian bazaars with aspects of modern retail like choice, convenience and quality and Central, a
chain of seamless destination malls. Some of its other formats include Brand Factory, Blue Sky,
aLL, Top 10 and Star and Sitara. The company also operates an online portal, futurebazaar.com.
The company operates 120 Big Bazaar stores, 170 Food Bazaar stores, among other formats, in
over 70 cities across the country, covering an operational retail space of over 6 million square
feet. As a focussed entity driving the growth of the group's value retail business, Future Value
Retail Limited will continue to deliver more value to its customers, supply partners,
stakeholders and communities across the country and shape the growth of modern retail in
India. Pantaloon Retail is the flagship company of Future Group, a business group catering to
the entire Indian consumption space.
During the fiscal year ended June 30, 2010 (fiscal 2010), the Company launched Sach
toothpaste and Ektaa. During fiscal 2010, its operational store space increased to 13.25 million
square feet, which includes around two million square feet of home business. During fiscal
2010, the Company acquired the South African retailer Shoprite’s India business.
The company was formerly known as Pantaloon Fashions (India) Limited and changed its name
to Pantaloon Retail (India) Limited in July 1999. Pantaloon Retail (India) Limited was
incorporated in 1987 and is headquartered in Mumbai, India.

Pantaloon Retail Operations Pantaloon

Retail India Ltd.

Entertainment
Lifestyle
Value Retailing Leisure &
retailing
Sports

Pantaloons Central Fashion Station ALL Mela Big Bazaar Food Bazaar
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Retail Industry Overview

The Indian retail industry is the fifth largest in the world.

Comprising of organized and unorganized sectors, India
retail industry is one of the fastest growing industries in
India, especially over the last few years. Though initially,
the retail industry in India was mostly unorganized,
however with the change of tastes and preferences of
the consumers, the industry is getting more popular
these days and getting organized as well. With growing
market demand, the industry is expected to grow at a
pace of 25-30% annually. The India retail industry is
expected to grow from Rs. 35,000 cr. in 2004-05 to Rs.
109,000 cr. by the year 2010.

Growth of Indian Retail

According to the 8th Annual Global Retail Development

Index (GRDI) of AT Kearney, India retail industry is the
most promising emerging market for investment. In
2007, the retail trade in India had a share of 8-10% in the
GDP (Gross Domestic Product) of the country. In 2009, it
rose to 12%. It is also expected to reach 22% by 2010.
According to a report by Northbride Capita, the India
retail industry is expected to grow to US$ 700 billion by
2010. By the same time, the organized sector will be 20%
of the total market share. It can be mentioned here that,
the share of organized sector in 2007 was 7.5% of the
total retail market.

Challenges facing Indian retail industry

 The tax structure in India favors small retail

business
 Lack of adequate infrastructure facilities
 High cost of real estate
 Dissimilarity in consumer groups
 Restrictions in Foreign Direct Investment
 Shortage of retail study options
 Shortage of trained manpower
 Low retail management skill
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The Future

The retail industry in India is currently growing at a great pace and is expected to go up to US$
833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a
CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone
up and is also expected to go up further in the future. In the last four year, the consumer
spending in India climbed up to 75%. As a result, the India retail industry is expected to grow
further in the future days. By the year 2013, the organized sector is also expected to grow at a
CAGR of 40%.

Format-wise urban investment in retail expected in next 5 years

Format % Share
Hypermarket 38%
Supermarket 28%
Specialty Store 22%
Cash N’ Carry 16%
Department Store 2%

Format Expected By 2011

Specialty
Format Hypermarket Supermarket & Cash N’ Carry Total
Dept.Store

New Retail Space

218 79 93 66 455
(Min. Sq. Ft.)

Retail Space/Floor
400 300 400 600 1700
Staff

No. of Front end Staff 544 264 132 110 1149

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Investment Opinion

Pantaloon retail has a strong retail presence across India with 16 million retail space and it is
expected to grow by more 2.5 million to 3.5 million square feet of space during the forthcoming
year. The company enjoys a strategic advantage over its competitors in terms of its strategy to
focus on value retail, understanding of the consumer mindset, sourcing capabilities and
presence across all formats. I prefer the company because it has performed well in spite of the
tough economic conditions which have severely impacted its peers. PRIL is capable of enjoying
profits at the time when its competitors were reeling under sales and margin pressure. Thus, I
expect the company to grow further. Due to the correction in the stock markets, PRIL is
available at an attractive market price. Backed by its expansion plans and an improving Industry
conditions, I expect the stock to perform well in the coming years. I recommend an
“Accumulate” on the stock with a Target Price of Rs 401.97.

BUY (> 15%) Accumulate (5% to 15%) Neutral (-5% to 5%)

Rating (Returns) Reduce (-5% to – 15%) Sell (< - 15%)
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Disclaimer:

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exceptionally used as the basis for any investment decision. Nothing in this document should
be construed as investment, Legal, taxation or financial advice. This report is not soliciting any
action based upon it. Each recipient of this document should make necessary investigations as
they consider important to arrive at an independent evaluation of an investment in the
securities of the companies referred to in this document (including the merits and risks
involved). This report has been made based on information that I consider reliable and are
publicly available but I do not state that it is accurate or complete and it should not be solely
relied upon such, as this document is for. I shall not be in any way held responsible for any loss
or damage that may arise to any person from any inadvertent error in the information
contained in this report. Accordingly, I cannot testify, nor make any representation or
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