Friday, November 25, 2011

Mehta Equities` take on retail sector post 51% FDI in multi-brand

Mehta Equities` take on retail sector post 51% FDI in multi-brand

In an interview with, Prashanth Tapse, AVP Research, Mehta Equities, Mehta Group gave outlook on retail sector post 51% FDI in multi-brand and investment strategy on Pantaloon, Shoppers Stop & Trent. The same is as follows:

Sector Outlook

We believe this action could bring in a revolutionary change in Indian retail market where burgeoning middle-class still shops at local, family-owned merchants and we see this revolution will change retail lifestyle. The decision will surely be a boosting trigger to global retail giants like Wal-Mart that is waiting long to tap India`s lucrative retail sector. Currently organized retail or large chains making up less than 10% of the actual potential market. India`s overall retail sector is USD 450 billion and expected to rise to USD 833 billion by 2013 and to USD 1.3 trillion by 2018, at a compounded annual growth rate of 10%. This is driven by the emergence of shopping centres and malls, and a middle class of close to 300 million people which is growing at nearly 2% a year.

This move on one side will help companies to get value investments, while on the other side I call it as a bold move as foreign players have deep pockets to drive themselves towards growth. For Indian`s this proposal will throw millions of small traders out of work in a sector that is the largest source of employment in India after agriculture. But finally with both pro`s & con`s consumer will get better business environment more choices and better prices, which we believe is what India needs.

Investment strategy on Pantaloon, Shoppers Stop and Trent

Shares in retailers jumped today after the government moved to open up the supermarket sector to global giants, a decision seen prompting a flurry of investments and tie-up opportunities for local players. FDI in multi-brand retail would really benefit capital-constrained retailers such as Pantaloon Retail, Shoppers Stop & Trent


Pantaloon Retail a flagship company of Future Group, pioneers in catering to the entire Indian retail consumption space. We advise investors to Hold with an immediate target of Rs 245 while on 3-6 month term basis one can see a target price of Rs 280-300.

Shares of the company gained Rs 31.8, or 15.85%, to trade at Rs 232.40. The total volume of shares traded was 2,303,099 at the BSE.

Shoppers Stop:

Shoppers Stop is an Indian department store chain promoted by the leading K Raheja Corp Group. Shoppers Stop retails a range of branded apparel and private label under the following categories of apparel, footwear, fashion jewellery, leather products, accessories and home products. Technically it can test 450+ hence we are positive.

Shares of the company gained Rs 32.5, or 8.73%, to trade at Rs 404.75. The total volume of shares traded was 455,668 at the BSE.


Trent is the retail arm of the Tata group. Trent is a retail operations company that owns and manages a number of retail chains in India Trent runs lifestyle chain Westside, one of India`s largest and fastest growing chains of lifestyle retail stores, Star Bazaar, a hypermarket chain, Landmark, a books and music chain, and Fashion Yatra, a complete family fashion store. Technically the stock can move upto 1,200 level; hence we believe Rs 1,200 is a fair value going forward.

Shares of the company gained Rs 79.55, or 8.15%, to trade at Rs 1,056. The total volume of shares traded was 42,006 at the BSE.

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.


No comments: