Veena Venugopal

Mumbai, Aug. 24

Valuations are getting stretched for retail stocks, claim brokers. With increased footfalls in malls and robust revenue growth, retail stores were deemed as growth investments. Brokers say that interest in the stocks was across the board, with retail investors and institutional investors wanting to own a piece of this booming sector. But with stock prices galloping the way they have, investment advice on the sector now is turning to one of caution.

The current view on Shoppers' Stop and Pantaloon Retail is that it is time to pause for a breather.. Earnings' expectations for the current quarter have also been winded downwards.

However, analysts point out that collections during Diwali would be the real test in earnings of both these companies.

Shoppers' Stop, after touching a low of Rs 354, closed at Rs 363, marginally lower against Tuesday's close of Rs 364.45.

The stock has come off its highs of last week, when it was trading around the Rs 395-level. Volumes have also declined, with 8,519 shares being changed at the BSE on Wednesday against the 2-week average quantity of 40,850 shares.

Pantaloon Retail, which had hit its 52-week high at Rs 2,035 on Tuesday, also ended weak at Rs 1,751.80, a drop of 6.60 per cent from Tuesday's close of 1875.65.

Volumes, however, continued to be robust with 97,766 shares being traded on Wednesday against the two-week average volume of 51,070 shares.

(This article was published in the Business Line print edition dated August 25, 2005)
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