India's 1 Tn Parallel Economy Will Keep Retail Bustling Retail, Land and Jewellery sales in India are no questions asked cash businesses and they show no signs of slowing, ever. Pantaloon to report Q1 Revenue gains of 26 per cent, Titan to report gains of 50 per cent aided by eyewear and jewellery growth. Quick Comment – Strong same-store growth led performance: We expect Pantaloon and Titan to demonstrate 74% and 76% earnings growth, respectively, during the June 2010 quarter, driven by continuing improvement in consumer sentiment. We reiterate our OW rating on both Pantaloon and Titan. Titan – Watches expected to demonstrate 15% revenue growth and jewellery 50%: businesses. We expect the watch business to deliver 15% revenue growth, driven by strong retail sales and a low base. For the jewellery business, we expect strong growth momentum driven by: 1) expansion of retail space; 2) strong consumer sentiment driving over 20% same-store volume growth; 3) gold price increase of around 20%; 4) improved product mix on strong performance of the studded jewellery business; and 5) favorable base effect. We expect Titan to deliver an overall revenue, EBITDA and net profit growth of 44%, 56%, and 76%, respectively. Pantaloon – Sustained improvement in consumer confidence and lower funding cost will likely drive strong earnings growth:
We expect operating profit and adjusted net profit growth of 24% and 74%, respectively, in F4Q10. Operating profit margins are likely to dip by 20bp, but a 7% fall in interest cost will drive YoY earnings growth of 74%, in our view. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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