The Hindu Business Line : Pantaloon Retail retains investor interest

TOUTED as the only retailer in the country to demonstrate success across multiple retail formats — Pantaloon, Big Bazaar, Food Bazaar — has enabled the stock of Pantaloon Retail to retain investor interest on the bourses.

Brokers maintain that the company's advantage lies in its being the first mover in the retail segment with a clearly defined business model. "As such, by and large, sentiment at this counter is always bullish," said a broker.

Industry sources estimate the domestic retail industry to be $180 billion per annum with organised retailing being a mere 2 per cent of the total retail business in the country. "Pantaloon in a short span has emerged a leader in the organised retailing arena. Its proposed mall management model if successful would be highly scalable," an analyst tracking the company said.

The company's growth strategy is focussed on not only physical expansion but expansion of geographical footprint, increasing its target audience and share of customer wallet.

According to a DSP Merrill Lynch report, apart from the first mover advantage, its key competitive advantages lies in its access to the best possible location, multiple format which leverages capabilities, backward integration (of sorts in apparels) and an ability to create private labels which have aided superior margins.

According to Mr Anshul Trivedi of B&K Securities, the basic growth drivers for the company will be growth in topline aided by an expansion spree also due to cost cutting measures and the expansion in margins through entry into private labels.

Pantaloon is expected to add floor space at around 2.1 million square feet over the next three years in various places. "The company, though an aggressive player with an ability to ramp up its business model quickly, could face competition from foreign players. There are also concerns over it managing the high growth rate. Additionally, it is a highly illiquid counter," industry sources reasoned.

Though the current market sentiment has imposed a breather on stock prices, brokers remain bullish on the counter. Analysts predict a 40 per cent growth in topline for the year 2004-05. The stock ended the day at Rs 346.25, down 4.98 per cent, with around 15481 shares traded on them NSE.