QUARTERLY PERFORMANCE ANALYSIS OF COMPANIES (October-December 2007

)
INDIAN RETAIL INDUSTRY

January 2008

Cygnus Business Consulting & Research
4th & 5th Floors, Astral Heights, Road No. 1, Banjara Hills, Hyderabad-500034, India Tel: +91-40-23430203-05, Fax: +91-40-23430201, E-mail: info@cygnusindia.com Website: www.cygnusindia.com

Disclaimer: All information contained in this report has been obtained from sources believed to be accurate by Cygnus Business Consulting & Research (Cygnus). While reasonable care has been taken in its preparation, Cygnus makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. The information contained herein may be changed without notice. All information should be considered solely as statements of opinion and Cygnus will not be liable for any loss incurred by users from any use of the publication or contents

..........................................................................17 METHODOLOGY USED FOR COMPANY PROJECTIONS ....................13 Bata India Limited .......................................................................................................................................14 Pantaloon Retail (India) Limited ...................................................................................................... 4.......... 6..............................................................................................4 OUTLOOK FOR THE SECTOR ....................................................................QPAC-Indian Retail Industry.................................16 Piramyd Retail Limited..................................................................................... 2..................................................................12 Shoppers Stop Limited ...............................8 COMPANY ANALYSIS ..................................................12 1........................................................ Provogue (India) Limited ........................................3 INDUSTRY ANALYSIS ......................................................................October-December 2007 CONTENTS EXECUTIVE SUMMARY ............................................................................................................ 3.......................15 Trent Limited.............................................7 INTER-FIRM COMPARISON .....18 © Cygnus Business Consulting & Research 2008 2 ................................... 5.

as per Cygnus estimates. the total revenue of the industry is expected to register a growth of 44% to Rs20. The growth beat the expectations as it was predicted that major slowdown because of higher interest rates will affect the key sectors such as automobiles and consumer goods. the organised retailer lacks the strategic vision. Although the outlook for retail industry in India looks bright. Further.367m for the quarter JFM08. rising consumer incomes. Higher farm output and improved growth in the mining sector helped Indian economy to grow at 8.89% in net sales for OND07 and Pantaloon is expected to achieve new level of growth at 61. with higher aspiration. Organized retail in India accounted for 4. Different developments in the industry signify the ongoing retail revolution. According to the India Retail Report 2007. Hence. resulting in the expansion of its share to 15–18% by 2011–12. Lack of proper infrastructure and stringent labour laws are discouraging factors for retail players. food and grocery retail is the single largest block. which resulted in increasing gap between claims and what was actually happens on the ground. most Indian retail players are under serious pressure to deliver the levels of quality and service to meet the consumer’s demands. real estate developments and changing lifestyles.QPAC-Indian Retail Industry. the government needs to create conducive environment for the growth of retail industry in India. India is witnessing an unprecedented consumption boom.October-December 2007 EXECUTIVE SUMMARY The growth story of Indian economy is intact. The Indian retail sector is the largest contributor to the GDP but is highly fragmented. Trent will open 20 Westside stores and 10 Star India Bazaar stores. The net profit growth for most of the retail companies would primarily depend on the cost-cutting measures adopted by them. © Cygnus Business Consulting & Research 2008 3 . Clothing. In OND07. Trent is expected to achieve a growth rate of 12.24%.84% compared with OND06. the retail industry is expected to record net sales of Rs20. favourable demographics. According to Cygnus estimates. Reliance will invest around Rs300 billion by FY10. Retailing contributes to 10% of GDP. the retail sector does not have 'industry' status. with growing economy. giving rise to a new middle class. The share of organised retail in India was around 4. Indian retail industry is ranked among the ten largest retail markets in the world. India has high percentage of consumers.3% during AMJ07. an expansion of 184 basis points as against OND06. The growth momentum in the sector is likely to continue in the coming quarters as retail sector in India is growing comfortably. textiles and fashion accessories constitute the second largest block.6%. estimated to be worth of Rs7. The Indian retail sector is at an inflexion point. A huge investment is expected by the organised players. The penetration of organised retail is increasing rapidly and more number of players are making their footprints in this industry in the anticipation to tap the growth opportunity. But NPM is expected to expand by 43 basis points during OND07. One of the main concerns is that in the rush to expand.6% in 2006. making it difficult for retailers to raise finance from banks to fund their expansion plans.6% of the Rs12000 billion retail market in India in 2006 that is around Rs550 billion. showing a growth of 38% over the corresponding quarter of the previous year. Hence.439 billion in 2006.9% despite a sharp slowdown in manufacturing growth. With rising income. Provogue is expected to register a growth of around 40. Of the total retail market.75m square feet in the next five years. The industry is expected to post operating profit growth of 78% with OPM of 9. the consumption has also scaled a new height.9% during second quarter (JAS07). down from 9. Piramyd will add 1. The developing economy and the resulting improvements in income dynamics along with factors like favourable demographics and spending patterns are driving the consumption demand. Future Group wants to expand space to acquire 30m square feet by FY10. whose spending power is rising contentiously since the past few years and is expected to continue in the future. This is because of the lack of good supply chain and efficient 3PL services.623m compared with OND06. Indian economy grew at annual rate of 8.

17m in OND07.623.83 PBT 1178. Cygnus Research Overall Performance of Retail Industry in OND07 Note: The aggregate consists of following companies: Future Group.October-December 2007 INDUSTRY ANALYSIS The Indian retail sector is at an inflexion point. It is estimated to experience a phenomenal jump. All these changes are driving the growth of organised retailing. whereas NPM is also estimated to expand by 43 basis points to 4% in OND07 as against 0 OND06. 15 30 Operating profit is estimated to rise by around 78% and net profit by 59% in OND07 compared to OND06 (Net profit growth taken 10 20 after excluding one time exceptional item of Rs 171.QPAC-Indian Retail Industry.13 Interest 474.43 Change 59% Industry Market Cap 100529. Trent. Apart from the growth. The estimated aggregate net sales for the retail sector. in terms of Net Sales (LHS) 20 40 growth.53 Change 78% Depreciation 418. with growing economy. Food and grocery. In 2006. Cygnus Research © Cygnus Business Consulting & Research 2008 % 4 . OND06 OND07 Rs in bn 900 800 700 600 Rs in m 500 400 300 200 100 0 Net Profit and NPM Net Profit (LHS) NPM (RHS) 6 2500 2000 1500 1000 500 EBITDA and OPM EBITDA (LHS) OPM (RHS) 12 10 8 6 4 2 0 % % 4 2 OND06 OND07 Rs in m 0 OND06 OND07 Source: BSE. Piramyd. the retail sector is estimated to post strong revenue growth of around 44% for the quarter OND07 as against OND06. Shoppers’ Stop. RPG and Pantaloon are boosting the present growth. rising consumer incomes. was 25 50 Net Sales and Growth around Rs20. Organised retail in India was estimated to be around 4. textiles and fashion accessories are dominant in the sector. OPM registered 5 10 an expansion of 184 basis points to 9. Provogue and Bata India Strong revenue growth According to Cygnus estimates. Industry Aggregate (Rs m ) Particulars OND 2007 Net Sales 20623. real estate developments and changing lifestyles. Organised retail has grown by leaps from around Rs355 billion in 2005 to Rs550 billion in 2006. retail market in India was valued at Rs12.17 Change 44% EBITDA 1974.000 billion.30m for company BATA). It is on a high growth trajectory due to abovementioned favourable factors.56 Tax 345.67 Other Income 96.6%. favourable demographics.49 Source: BSE.13 Tax rate 29% PAT 833. comprising of top six players in the sector. clothing. in the operating profit for the quarter Growth (RHS) OND07 in comparison with OND06. the fresh investments by retail players Reliance.6% that is around Rs550 billion.

As per Cygnus estimates. Gems and jewellery retail According to the World Gold Council. India’s gold consumption this year could in fact cross the 1.000-tonne mark for the first time.QPAC-Indian Retail Industry. TATA. The raw material cost is estimated to have risen by 262 basis points in OND07 compared to OND06 as a percentage of net sales. The jewellery market size is estimated to be Rs602 billion in 2006 with the unorganised sector dominating the country's jewellery retail landscape with a 96% market share. Interest and depreciation as a percentage of sales is estimated to have increased by 65 basis points and 34 basis points in OND07 as against OND06. It is understandable that most international and domestic retailers are making a beeline for it. Tax related costs will also see some drop of around 133 basis points in OND07 as compared to OND06. RPG Group and AV Birla Group—are showing a keen interest in this segment. Home Appliances 2006 Unorganised 90% Organised 10% Source: IMAGES F&R Research 5 . 70 60 % of Net sales 50 40 30 20 10 0 -10 Raw materials Staff cost Factory Overheads Selling Expenses Other Depreciation expenditure Interest Tax Cost Structure OND06 OND07 Source: BSE. Some of the major players— ITC Group. Cygnus Research Segmental Performance Food and grocery retail Food and Grocery segment is expected to be the major driver of organised retail industry in India. Food and grocery retail is the single largest block estimated to be worth of Rs7.October-December 2007 Cost structure Cost saving is a challenge for majority of the retail industry players. Shops selling food and grocery constitute over 5m of the 12m retail outlets in India.439 billion in 2006 of which food grains and unprocessed fruits and vegetables account for half of total food and grocery sales. there will be an improvement in the cost structure as percentage of sales for most of the players in this quarter. But the staff costs and other expanses for the industry is estimated to have dropped by 115 basis points and 152 basis points respectively. The organised sector © Cygnus Business Consulting & Research 2008 Food and Grocery 2006 UnOrganised 99% Organised 1% Consumer Durables.

Clothing. Consumer durables. the industry’s institutional sales are estimated to be over Rs70 billion. Source: IMAGES F&R Research the growth of the Indian drug industry has slowed down this year. 30% 22. The factors that are pushing the market are the continuous change in technology and in the mindset of the consumers.9 population is moving towards the age 0% group 20-54 ie the working population 2006 2011 55+ 35-54 20-34 with higher purchasing power.9 38. textiles and fashion accessories segment was estimated to be at Rs1135 billion in 2006 with the organised retail contributing around 19%. pushing for the retail revolution. The composition of the Indian 10% 11. Changing lifestyles and preferences are prominent driving factor too.9 13 2016 0-19 6 .8 (Source: Ministry of Home Affairs. with organised retail having a share of 10.2 36 India has the youngest consumer profile. but Pharma retailing is becoming more organised. Sales from the overseas market is expected be around Rs310 billion for the year. Among consumer durable retail goods. But the trend is gradually changing with the organised sector witnessing upward trend due to factors such as increasing consumer sophistication and competition from other luxury products.QPAC-Indian Retail Industry. home appliances retail In the last ten years. Cygnus Research consumption.4%.3% compared to growth of over 15% last year. Diamond jewellery consumption in India is also estimated to jump by 78% in 2010.1 25. the market size of the domestic retail market at the end of 12-month period ended November 2007 stood at Rs305. A few corporates that have already entered into this segment include Dr Morepen. The designer apparels will also play a role in boosting the market. Clothing. This is expected to be a major driver of Source: Indiastat. The market for consumer durables and home appliances was valued at Rs481 billion in 2006.98 billion. Organised retail in this segment is around 3%. The domestic retail market for the 12-month period ended November 2007 grew by 12. © Cygnus Business Consulting & Research 2008 27.2 23.9 21. According to market research firm ORG IMS. This segment is attracting more and more organised retailers.October-December 2007 forms only 4% of the overall market. flat-screen television. a huge growth has taken place in the consumer durables retail market. Govt 20% of India). 60% over 67% of the population is below 35 50% 27. Medicine Shoppe. India’s growing importance in the global jewellery market is only expected to increase in the future with total estimated jewellery sales of US$21 billion by 2010 and US$37 billion by 2015. This is the only segment wherein organised retail is showing its presence.5 years of age and around 52% of the 40% population is below 24 years of age. a growth of 20% over last year. According to a KPMG study. Driving Factors Changing Demographic profile 100% 90% 80% 70% Share of Population by Age 41. Apollo Pharmacies and CRS Health. textiles and fashion accessories retail Clothing.8 10. In addition. Textiles & Fashion Accessories 2006 Unorganised 81% Organised 19% Pharma retail Price reduction and rupee appreciation. LCD televisions and frost-free refrigerators have been in huge demand in recent times.

systems and shop-fit. Consumers are increasingly becoming North brand conscious and are looking for 39% West products with quality.2007 around 7. This becomes very much evident from the growth of organised retail in India. foreign direct investment (FDI) to India is likely to grow the fastest in next few years. India is in the highest category of Aspiration Index in Asia along with China. Investments According to Standard & Poor's.1%. It is estimated that Rs133 billion capex per annum will finance the growth of organised retail. OUTLOOK FOR THE SECTOR Approximately 80% of the 12m retail outlets spread across the country are run by small families using household labour. Lifestyle to invest more then Rs4.October-December 2007 Consumer Spending Growth in income is supported by the changing demographics. organized retailing is projected to grow at the rate of about 37% in 2007 and 42% in 2008. South East 18% 10% Emergence of Malls The emergence of mall culture and rapid Source: FICCI KPMG development of malls is expected to boost the retail industry in India. but not without obstacles. 1. Easier acceptance 33% of luxury products and an increased willingness to experiment with are the main drivers for retail segment in India. © Cygnus Business Consulting & Research 2008 7 . The additional retail space is expected to add Rs300 billion of business to organised retail. This has resulted in higher consumption spending. With 300 new malls. With average consumer becoming richer. According to AC Nielsen. Reliance to invest Rs300 billion to set up multiple retail formats by 2009-10.52 billion by 2010. India is investing over US$130 billion in infrastructure by the end of this decade.5 billion investment in next five years to expand on Max Hypermarkets & value retail stores. the retail industry is expected to ride on the crest of the growth tide. Following are some expansion plans by major retailers: Pantaloon is going to have 30m sq ft by FY10.500 supermarkets and 325 departmental stores under construction. Indonesia and Thailand. Home & Lifestyle Centres. Approximately 100m sq ft of quality shopping centre is expected to come up by the end of 2007-08. the sector is going to have a red carpet on its way. Moving forward. Indian retail industry itself has attracted investment of over Rs200 billion in creating infrastructures.QPAC-Indian Retail Industry. expected to reach a size of Rs1064. The estimated growth in consumption spending during 2005-08 is Projected Mall Space . younger and more aspirational.

Pantaloon is expected achieve growth of around 62% to Rs12.25m in OND06.43m in OND07 compared with OND06.74m during OND07 compared with OND06. It is estimated that Provogue would register a growth of 41% in net sales to Rs1. which were unable to generate revenue. Shoppers’ Stop is also likely to register a growth of around 33% in sales. Cygnus Research © Cygnus Business Consulting & Research 2008 8 . Bata India is estimated to register a growth of around 13% in net sales. High growth in sales is due to expansion plan to add 5m sq ft during FY08. High sales turnover is contributed by opening of its new stores.367.QPAC-Indian Retail Industry.October-December 2007 INTER-FIRM COMPARISON Operational Performance Good performance estimated for OND07 As per Cygnus estimates.009. Higher growth in sales is achieved mainly due to the company’s rapid store expansion and extension of the Provogue brand to include new categories such as footwear. Piramyd Retail is also estimated to achieve a growth in sales of around 38% with a sales turnover of Rs568. The growth is due to closing down of a few Bata stores. with a sales turnover of Rs2.383m.181. Cygnus Research Net sales and Growth OND06(LHS) OND07 (LHS) Growth(RHS) 70 60 50 40 30 20 10 0 % Financial Performance 14000 12000 10000 Rs m 8000 6000 4000 2000 0 OND06 OND07 OND06 OND07 OND06 OND07 OND06 OND07 OND06 OND07 OND06 OND07 Bata Pantaloons Piramyd Retail Provogue Shoppers Stop Trent Net sales(LHS) NPM(RHS) OPM(RHS) Financial performance 25 15 5 -5 % -15 -25 -35 Source: BSE. Trent is estimated to register a growth of around 12% to Rs1. and fashion accessories. 14000 12000 10000 Rs m 8000 6000 4000 2000 0 Bata Pantaloons Piramyd Retail Provogue Shoppers Stop Trent Source: BSE. women’s wear.09m for the quarter OND07 from Rs716.67m.

39 3. © Cygnus Business Consulting & Research 2008 9 .18 2.49 9.31 0.58 2. OPM and NPM are estimated to be around 7. Good operational efficiency made OPM expand as against OND06 but lower other income made NPM decline.64 1.3% respectively.41 1.12 56.49 0. The OPM and NPM for Shoppers Stop are likely to be under pressure.8%.80 13.00 2. which is quite inherent from the kind of industry they operate in.88 18.3% and NPM of 6.89 1.54 3.44 1. Cost Structure Cost Structure (% of Net Sales) OND 06 Vs OND 07 Shoppers Stop Bata Pantaloon ’06 ’07 ’06 ’07 ’06 ’07 49.74 1.75 3. the raw material cost is further expected to go up for almost all these companies during OND07 compared with OND06.77 4.60 74.23% respectively.68 1.79 1.00 2.02 9. OPM and NPM of Shoppers Stop are estimated to be around 9. For Pantaloon.81 30.30 1.91 68.47 2.00 2.61 0. the major chunk of cost comes in the form of raw material cost.97 0. Following raw material cost is the other expenses. While other expenses are expected to come down for these companies.QPAC-Indian Retail Industry. Bata India will register OPM and NPM of 12.89 2.77 3.65 0.71 2.33 2.67 Source: BSE.93 1.38 33. Cygnus Research Raw materials Staff cost Overheads Selling Expenses Other expenses Depreciation Interest Tax Cost Structure (% of Net Sales) OND 06 Vs OND 07 Provogue Piramyd Trent ’06 ’07 ’06 ’07 ’06 ’07 56.16 2.4% and 8% respectively.05 3.30 1.85 47.18 31.63 70. OPM would be 14.58 7.37 Industry ’06 ’07 55. which these companies consume on a large scale.October-December 2007 Provogue and Trent outperformed in terms of growth in profits Provogue is estimated to register highest gain in NPM (10.74 1.64 1.5% and 4.85 1.10 25. OPM expanded due to lower other costs and staff costs but NPM declined due to lower other income.02 9.61 2.67 Raw materials Staff cost Overheads Selling Expenses Other expenses Depreciation Interest Tax Source: BSE.01 1.54 3.02 73.40 58.84 6.54 18.9% and 3.62 4.44 1.18 31.15 8.43 0.77 2.11 19.85 24. as a result of increasing use of energy-saving devices.13 4.34 60.03 1.39 1.01 2.80 66.84 6.84 24.07 1.28 2.83 18.58 2.52 5. OPM of Provogue depressed compared with OND06 due to higher staff cost.89 2.51 1.40 58.00 5. Trent is estimated to post an OPM of 9.00 8.03 16.94 2. Cygnus Research For retail companies.30 1.81 30.64 21.25 0.01 1.37 14. which mainly comprises power cost.29 24.27 0.99 Industry ’06 ’07 55.56 17.39 1.23%.05 74.29 3.92 67.50 2.09 1.30 2.41 4.28 0.05 9.15 8.5%) compared with its peers.

93 due to strong buying by FIIs.89 24. the Sensex zoomed by 14. owing to expectations that Fed would further slash the interest rate. © Cygnus Business Consulting & Research 2008 30-Dec 10-Nov 15-Nov 20-Nov 25-Nov 30-Nov 5-Dec 5-Nov 30-Dec 10-Nov 15-Nov 20-Nov 25-Nov 30-Nov 5-Dec 5-Nov 10 .07 27.83 82.98 --Investors (FII) entering the market.October-December 2007 Stock Scan: 370 320 270 220 170 120 70 Sensex Piramyd Pantaloon Provogue Relative Market Cap performance 11-Oct 16-Oct 21-Oct 26-Oct 31-Oct 1-Oct 6-Oct 10-Dec 15-Dec 20-Dec 25-Dec 25-Dec 150 140 130 120 110 100 90 80 Relative Market Cap performance Sensex Bata india Shopper Trent 11-Oct 16-Oct 21-Oct 26-Oct 31-Oct 1-Oct 6-Oct 10-Dec 15-Dec 20-Dec Source: BSE.49% in December. the Sensex declined by 1. Cygnus Research BSE Sensex: The Sensex witnessed an Stock performance in OND07 increase of 17.84% in November on account of weak global cues.7 doubts over the involvement of Shopper’s Stop 3. firm Bata India 36. and anticipation of drop in oil prices and huge buying by FIIs in small cap stocks. SEBI clearing the Provogue 35. touching US$100 barrels.03 58.QPAC-Indian Retail Industry.51 56.85 135.48% Pantaloon 45.73 participatory notes in the market came Source: BSE. In 46. For the first time. Cygnus Research as a boon in the later part of October.78 31.71 231.42 October. After a slum in November.42 number of Foreign Institutional Piramyd 281. the Sensex lost some points during the muhurat trading.75 23.60 47.38 global market and an expectation of Trent good JAS07 results. slower foreign inflow and ever rising oil prices.07% from October to Change (%) P/E High P/E Low December 2007 on account of large Sensex 17. After the rally party.90 92. the Sensex steered forward by 3.14 104.

98% in share price. Pantaloon: It registered a gain of 46. Indiabulls has also made an open offer to acquire a further 20% from Piramyd shareholders. Bata India: It registered a gain of 45. The company is going to launch value stores for apparels in next six months.30% in JAS07 quarter. During OND07.October-December 2007 Piramyd: It registered a gain of 281.QPAC-Indian Retail Industry. Tata’s retail arm Westside will launch its first store for women.9% of Piramyd Retail for Rs400m. During OND07. Bata India revamped its retail strategy. Reliance Retail and Bata formed an alliance for footwear vertical. Trent set up Star Bazaar in Bangalore. Trent: It registered a gain of 36. © Cygnus Business Consulting & Research 2008 11 . its net was up 56. Pantaloon Retail India Ltd increased its revenues by 78.5% and reported an 87% increase in net profit. Indiabulls Wholesale Service has agreed to buy 63. Pantaloon Retail and National Textile Corporation are planning to sign accords of joint ventures to enhance market presence. Bata India is also diversifying into clothing. During OND07.03% in share price.71% in share price.6% in share price.

91 16.24 92. the company is estimated to have registered sales of Rs1. footwear and fashion accessories.29 23.43 61% 47.47 390.18 101% Industry Aggregate OND FY08 (E) 20623.20 P/E 44.98 64% Source: Cygnus Research Note: 1. PBT and PAT are projected figures 3. innerwear. © Cygnus Business Consulting & Research 2008 12 .81 17.05 52% 69. Even the domestic apparel market in India is growing at the rate of 13% per annum.01 ROE 7% 8% 9% ROCE 11% 11% 12% (Rs m) Quarter Y/E March Net Sales Change EBITDA Change Depreciation Interest Other Income PBT TAX Tax Rate PAT Change OND FY07 716.53 78% 418. EPS is projected on the basis of profit The company registered a growth of 53% in sales in FY07 compared to FY06 and plans to maintain its growth momentum in relation to the industry. women’s wear.43 61% 47.85 4487.85 41% 495. Provogue mainly deals in menswear.75 53% 325.17 44% 1974.12 68.43 59% Full year ended March 07(A) 2387.02 14.50 17% 75.13 29% 833.009.56 345. The company is on a major expansion spree and expects to bring 500.09m.04 36. Provogue (India) Limited Net Sales (Rs m) March 07 (A) March 08 (E) March 09 (E) 2387.86 17.98 64% March 08 (E) 3367.52 77% 16.19 18.13 474.27 18% 106.000sq ft. which is growing at a CAGR of 35%.86 15.98 322.76 15. It is going to launch perfumery and deodorants.16 56. a growth of 41% as against OND06.09 41% 149.71 61.70 25.23 27.06 16% 195.04 17% 322.October-December 2007 COMPANY ANALYSIS 1. PAT registered a growth of 41% to Rs106.94 129.07 27% 17.02m.23 232.08 490.03 PAT (Rs m) 195. 40 Provogue studios and four Promart stores.02 41% JFM FY08 (E) 905.02 16.67 96.95 3.000-7.04 36.06 16% 195.60 18% 98.93 90.78 21.75 53% 325.000sq ft under operation by 2010. The bottom-line of the company will get affected as the income tax exemption enjoyed by the manufacturing unit at Daman is available till March 2008.75 3367.59 99% 12. It expects to add 21 mega outlets of 5.71 61.85 EPS (Rs) 10. All calculations are on the basis of trailing method 2.25 59% 117.26 16.30 119.23 232. During the OND07 quarter.05 41% 137.08 64% March 07(A) 2387.91 16.83 1178.26 105% OND FY08 (E) 1009.QPAC-Indian Retail Industry.

It is expected to remain on a high growth trajectory due to its huge expansion plans and improvement in conversion ratio.67 153.07 35% 811.28 24.57 -604% Industry Aggregate OND FY08 (E) 20623.95 301.12 241.93 30% 238.13 225.23 71.09 63% 584.67 69% 105.97 31.34 89.113. Currently.01 20% 408.78 807. With the strong store growth. the company is expected to have registered sales of Rs3. PBT and PAT are projected figures 3.13 474. is expected to match industry standards.30 PAT (Rs m) 261.24 33% 295.70 16% OND FY08 (E) 3113. PAT dipped by 7% to Rs131.46 38.98 36% 674.17 44% 1974.00 487.87 6.07 13906.65 16.53 78% 418.37 454.67 96.90 169.16 32% 114.07 33.64 39% 140.October-December 2007 2. which is expected to go up to 2.QPAC-Indian Retail Industry.46 38% 256. it has 1.60 565.56 345.97 17.27 21.00 193.95 -3% March 08 (E) 10776.83 1178.09 11.07 34% 301. EPS is projected on the basis of profit The top-line has shown a growth of 36% in FY07 compared to FY06. During the quarter OND07.60 15% March 09 (E) 13906.22 P/E 82.13 ROE 9% 9% 16% ROCE 12% 11% 17% (Rs m) Quarter Y/E March Net Sales Change EBITDA Change Depreciation Interest Other Income PBT TAX Tax Rate PAT Change OND FY07 2343.24m. However. Shoppers Stop Limited Net Sales (Rs m) March 07 (A) March 08 (E) March 09 (E) 7995.30 29% 1321. All calculations are on the basis of trailing method 2.73 55. © Cygnus Business Consulting & Research 2008 13 . the company’s profitability is sure to receive a boost.59 24% 31.18 61.69 91.43 59% Full year ended March 07 (A) 7995.09 33% 264. there is pressure on the margin due to increasing employee cost.06 21.54m.17 87% Source: Cygnus Research Note: 1.2m sq ft under operation. a growth of 33% as against OND06.74 84.95 30% 565.17 EPS (Rs) 7.91 230.30 8.18 46% 261.06 90. which in the future.54 -7% JFM FY08 (E) 2786.64 32% 131.52 8.76 24% 118.5m sq ft by March 2008 and 6m sq ft by 2010.98 10776.13 29% 833.

718.14 P/E 183.1 96.9 12.23 42% Dec 06 (A) Dec 07 (E) Dec 08 (E) 7.1 24.00 13% 295.43 59% Full year ended Dec 06 (A) 7702.1 56% Source: Cygnus Research Note: 1.90 6% 964.59 54.234. The company sells over 45m pairs of shoes every year and expects to have an annual sales turnover of more than Rs8.20 166% 136.10 ROE 19% 17% 24% ROCE 21% 24% 31% (Rs m) Quarter Industry Aggregate OND FY08 (E) 20623.30m which was added in other incomes in OND06. which shall give a boost to its top-line. EPS is projected on the basis of profit Bata has recovered from its loss-making position since last two years and registered a net profit of Rs398.QPAC-Indian Retail Industry.00 26% 191.97 12.00 13.56 345.383.60 66.October-December 2007 3.87 103% 39.00 9% 425.383. It has 1.40 112.50 61.90 559. During the quarter OND07.20 78.60 491.20 7.67 96.0 25% 72. showing a growth of 219% compared to December 2005.17 44% 1974.23 EPS (Rs) 6.10 26% 224.000m.80 93.10 308% OND FY08 (E) 2. Net profit is estimated to decline by 15%.21 159.50 219% Dec 07 (E) 8718.23 143.60 212.82 794.53 78% 418.2 19.00 15% Dec 08 (E) 9234. The company has also improved its operational efficiency and has cut down its staff cost. All calculations are on the basis of trailing method 2.00 18% 651.00 101.1 49% 40.0 15% 144.20 68.67 64.70 13.00m.65 34% 168.30 19% 398.00 18% 458. Bata India Limited Net Sales (Rs m) PAT (Rs m) 398.5m in December 2006.80 271.00 8.13 29% 833.65 56.00 651.83 1178.702.250 stores and is planning to add 200 new stores in the next three years.90 Y/E March Net Sales Change EBITDA Change Depreciation Interest Other Income PBT TAX Tax Rate PAT Change OND FY07 2102.50 302.60 -15% JFM FY08 (E) 2109.13 474. In the year 2006.50 458. it is due to one time exceptional item of Rs 171. a growth of 13% as against OND06.13 10. the company closed down 139 of its unviable stores and undertook restructuring of the existing ones.10 13% 718.10 9.70 257. PBT and PAT are projected figures 3.00 83% 42.30 9% 146. © Cygnus Business Consulting & Research 2008 14 .27 69% 156. the company is estimated to have registered sales of Rs2.

55 ROE 13% 13% 11% ROCE 17% 20% 19% (Rs m) Quarter Y/E March Net Sales Change EBITDA Change Depreciation Interest Other Income PBT TAX Tax Rate PAT Change OND FY07 7526. This will push up the depreciation and interest cost.67 50% 6247.67 658.43 64% 368.181.43 59% Full year ended June 07(A) 32544.20 1338.12 494.83 1178.14 52.21 58% 4075.62 -22% JFM FY08 (E) 12689.67 96.74m.00 33% 342.00 33% 313.October-December 2007 4.66 1984.20 645.90 12% June 09 (E) 77124.26 220. Pantaloon Retail (India) Limited Net Sales (Rs m) March 07 (A) March 08 (E) March 09 (E) 32544.32 47% 987.84 2714.53 78% 418. The company is planning a capital expenditure of Rs6.74 62% 1106.49 1925.81 51470.88 116.49m in OND07 as against OND06 © Cygnus Business Consulting & Research 2008 15 .30 33% 1338.80 3027.62 167. 100 Food Bazaar and 20 more E-zones by June 2008.27 EPS (Rs) 8.21 77124. PBT and PAT are projected figures 3.55 742. Its PAT dipped by 9% to Rs396. Pantaloon will set up 60 Big Bazaars.85 P/E 58.27 35% Source: Cygnus Research Note: 1.52 12.82 68% Industry Aggregate OND FY08 (E) 20623.23 441.29 377. All calculations are on the basis of trailing method 2.52 9.00 415.09 14.82 154.17 51% 82.61 897.26 75% 607.27 907.500m and an investment of Rs7.71 94% 196.83 64% 142.29 207.81 74% 2333. During the OND07 quarter.30 33% 437. a growth of 62% as against OND06. About 35% of the turnover is expected to be generated from the opening of new stores. It is on an expansion spree and plans to increase the retail space to 10m sq ft by the end of 2008 and take it further to 30m sq ft by 2010.00 33% 1807.10 53% 913.99 467.88 34% 1198. the company is estimated to register sales of Rs12.67 PAT (Rs m) 1198.87 408.13 29% 833.20 87% June 08 (E) 51470.08 611. EPS is projected on the basis of profit Pantaloon Retail has shown a growth of 74% in its sales turnover in FY07 compared to FY06 and is expected to maintain its growth momentum in future.13 474.96 136% OND FY08 (E) 12181.QPAC-Indian Retail Industry.81 1810.90 1807.000m for maintaining inventory and working capital for new stores.86 59% 570.17 44% 1974.56 345.03 38. 15 Pantaloon stores.00 509.

38 27.89 85. © Cygnus Business Consulting & Research 2008 16 .38 25.81 3.11 338.11 14% 366.76 11% 64.51 82. a growth of 12% as against OND06.82 32% 336.13 474.17 44% 1974.76 2% 79. the company is estimated to have registered sales of Rs1.35 63% 26.15 398. Star India Bazaar and Landmark and plans to add 11 Westside stores.14 67% OND FY08 (E) 1367.54 8% Source: Cygnus Research Note: 1.367.67 96.82 5180.75 13% 15.83 1178.43 4.63 19% 56.86 21% 112.24 13. EPS is projected on the basis of profit The company has achieved a growth of 32% in sales in FY07 compared to FY06 and expects to maintain the momentum in future.31 31.24 19% 107. toilet preparations and perfumes.79 4.61 -20% Industry Aggregate OND FY08 (E) 20623.09 14. Its principal activities are to develop.48 P/E 33.00 10% 445.53 78% 418.87 ROE 8% 7% 6% ROCE 9% 8% 8% (Rs m) Quarter Y/E March Net Sales Change EBITDA Change Depreciation Interest Other Income PBT TAX Tax Rate PAT Change OND FY07 1218.00 PAT (Rs m) 324.22 6% 29.54 EPS (Rs) 20. manufacture and market apparels.36 70.00 120.29 34.11 -3% March 09 (E) 5676.11 5676.34 409.10 313.October-December 2007 5.32 22% 338. cosmetics.22 24% 85.43m. Trent Limited Net Sales (Rs m) March 07 (A) March 08 (E) March 09 (E) 4557.87 21.50 112.00 18.43 59% Full year ended March 07 (A) 4557.98 9% 98. which will give Trent an opportunity to capture the premium segment of consumers and increase profitability.43 12% 127. It currently has 39 stores operating as Westside.13 29% 833.55 19.00 435. During the quarter OND07.QPAC-Indian Retail Industry.46 31.16 -21% JFM FY08 (E) 1201.12 166. PBT and PAT are projected figures 3. All calculations are on the basis of trailing method 2.03 103.79 21% 324.56 345.10 29% March 08 (E) 5180.25 16. The company has entered into a strategic partnership with Benetton Group for the Sisley brand’s commercial expansion in India.04 36.86 97.17 21% 313.75 132. five Landmark stores and three Star India Bazaars by 2008.56 19.28 28% 119.

95 PAT (Rs m) -428.47 -2.67 -469.39 March 09 (E) 2723.87 30.77 OND FY08 (E) 568.39 -57. Provogue and Shoppers Stop.89 9.27 20.45 -55. © Cygnus Business Consulting & Research 2008 17 .72 22.51 JFM FY08 (E) 676.71 -2.23 -196% 59. The company is planning to open 17 mega stores and 69 Trumart by 2008.53 16.51 0.86 EPS (Rs) -23.27 Industry Aggregate OND FY08 (E) 20623.76 -22.85 17. The company fears acquisition by Aditya Birla group’s non-listed retail arm Aditya Birla Retail. the company is estimated to register sales of R568.QPAC-Indian Retail Industry.10 -100% 16.40 -469.08 -463.October-December 2007 6. a growth of 38% as against OND06. Reason behind this possibility is that the company is facing stiff competition from Pantaloon.08 11.25 2723.17 44% 1974.19 9% 69.73 118% 77.84 -431.67 38% -0.95 27% 56.83 1178.00 1.24 -2.57 -428.13 29% 833. EPS is projected on the basis of profit Piramyd Retail registered a growth of 60% in FY07 compared to FY06. The possible acquisition by Aditya Birla will definitely improve its profitability in future. During the quarter OND07.67 96.67 March 08 (E) 2149.90 -23.47 2149.53 78% 418.47 60% -340.89 P/E -2.25 38% 44.25 35% -311. All calculations are on the basis of trailing method 2. Its increasing cost is ringing alarm bells since it is possible that its profitability will fall in future.51 -1979% 14.00 18% 13.56 345.21 16.86 44% -85.98 61.69 -23.60 0.16 105.99 5.96 -117.13 474.50 -57.36 2.27 3. Piramyd Retail Limited Net Sales (Rs m) March 07 (A) March 08 (E) March 09 (E) 1589.90 46.00 -23.86 - Source: Cygnus Research Note: 1.09 -144% 19.67m.42 ROE -38% -37% -5% ROCE -21% -20% 1% (Rs m) Quarter Y/E March Net Sales Change EBITDA Change Depreciation Interest Other Income PBT TAX Tax Rate PAT Change OND FY07 410.77 -118. PBT and PAT are projected figures 3.64 80.43 59% Full year ended March 07 (A) 1589. which are gradually increasing their market share.

b. d. Press release and news items for capturing any stark deviation in quarterly performance YoY or across industry value chain 6. Analysis of growth rate of last 8 quarters 5. Validating with aggregate figures for comparison © Cygnus Business Consulting & Research 2008 18 .October-December 2007 METHODOLOGY USED FOR COMPANY PROJECTIONS The methodology for company is based on: 1. Recent strategies and initiatives in terms of: 8. e.QPAC-Indian Retail Industry. c. a. Recent Quarterly growth rate 4. Making revenue projection for quarters for segments 9. Understanding company’s product services business segments exports 3. Demand Supply prices Technology Regulation M&A Product launches Capacity addition 7. Recent company annual report – Chairman’s statement and MD & A 2. b. Understanding Industry and economic trends a.