1. 3QFY2010 Result Update I Retail
April 26, 2010
Pantaloon Retail ACCUMULATE
CMP Rs423
Performance Highlights Target Price Rs469
For 3QFY2010, Pantaloon Retail (PRIL), on a standalone basis, reported a Investment Period 15Months
25.3% yoy growth in net sales to Rs2,057.6cr. The growth was below our
expectation of 30.2% during the quarter. The growth in the top-line was Stock Info
facilitated mainly due to Same Store Sales (SSS) growth yoy in Value and Sector Retail
Lifestyle Retailing, of 13.9% and 13.2%, respectively. The EBITDA margin
remained more or less unchanged at 10.5% yoy. On the net profit front, PRIL Market Cap (Rs cr) 8,719
reported a growth of 62.7% to Rs55.9cr, led by a decent top-line performance
Beta 1.0
and unchanged interest cost (on a yoy basis). Going ahead, we expect the
company to continue witnessing good growth, on the back of retail space 52 WK High / Low 455 / 176
expansion, a revival in consumer sentiment, back-end efficiencies and
Avg. Daily Volume 302,112
organisational restructuring. We recommend an Accumulate rating on the
stock. Face Value (Rs) 2
BSE Sensex 17,745
Retail space expansion on track: In 3QFY2010, PRIL added ~0.5mn sq ft
of retail space, thereby taking the total addition during 9MFY2010 to ~1.3mn Nifty 5,322
sq ft. We believe that the retail space expansion is on track, considering the
company’s plan to add ~2mn sq ft every year. The retail space expansion is Reuters Code PART.BO
skewed towards the value retailing format, accounting for around ~ 65% of Bloomberg Code PF@IN
the retail space addition during 3QFY2010. We believe that the improved
consumer sentiment, coupled with retail space addition, would bode well for Shareholding Pattern (%)
PRIL, going ahead.
Promoters 44.7
Outlook and Valuation: PRIL's presence across price points and categories MF/Banks/Indian FIs 22.9
helps the company to be in a better position than its peers. Apart from
FII/NRIs/OCBs 25.9
positives like on-track retail space expansion and a revival in consumer
sentiment, we believe that the company's restructuring initiative would enable it Indian Public 6.5
to enhance its focus on different segments and would also provide it with a
good opportunity of value unlocking. At Rs423, the stock is trading at 20.8x its Abs. (%) 3m 1yr 3yr
FY2012E Earnings and at 2.4x its FY2012E P/BV. Our SOTP Target for PRIL is Sensex 5.7 56.6 24.7
Rs469, wherein we have valued its stake in FCH, HSRIL and Future Generali at
Rs31, Rs12 and Rs18, respectively. Considering our fair value of Rs469 for the PRIL 62.5 110.1 10.6
stock, we recommend an Accumulate rating on the stock.
Key Financials (Standalone)
Y/E June (Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 6,342 8,254 10,704 13,137
% chg 25.6 30.2 29.7 22.7
Net Profit 143.8 221.9 320.6 419.6
% chg 14.2 54.3 44.5 30.9
EBITDA Margin (%) 10.5 10.3 10.1 10.1
EPS (Rs) 7.6 10.8 15.6 20.4
P/E (x) 55.9 39.3 27.2 20.8
P/BV (x) 3.5 3.0 2.7 2.4
RoE (%) 7.0 8.6 10.4 12.2
RoCE (%) 11.3 11.8 13.2 14.7
Viraj Nadkarni
EV / Sales (x) 1.8 1.5 1.2 0.9
Tel: 022 – 4040 3800 Ext: 309
EV/EBITDA 17.4 14.1 11.5 9.6
E-mail: virajm.nadkarni@angeltrade.com
Source: Company, Angel Research
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Pantaloon Retail I 3QFY2010 Result Update
Exhibit 1: 3QFY2010 Performance
Y/E June (Rs cr) 3QFY2010 3QFY2009 % chg 9MFY2010 9MFY2009 % chg
Net Sales 2,058 1,642 25.3 5,748 4,679 22.8
Consumption of RM 1,459 1,150 26.9 4,033 3,278 23.0
(% of sales) 70.90 70.03 70.2 70.1
Staff Costs 84.2 69.5 21.2 238.66 204.23 16.9
(% to sales) 4.09 4.23 4.2 4.4
Other expenses 299.0 249.6 19.8 866.37 711.43 21.8
(% to sales) 14.53 15.20 15.1 15.2
Total Expenditure 1,842 1,469 25.4 5,138 4,194 22.5
Operating Profit 215.6 173.0 24.6 609 485 25.5
OPM 10.48 10.54 10.6 10.4
Interest 85.9 84.7 1.3 256.24 227.27 12.7
Depreciation 46.5 36.9 26.0 134.91 101.23 33.3
Other Income 1.4 1.6 (9.4) 8.18 4.27 91.6
PBT (excl. Extr. Items) 84.7 53.0 59.8 226.2 161.0 40.5
Extr. Income/(Expense) - - - -
PBT (incl. Extr. Items) 84.7 53.0 59.8 226.2 161.0 40.5
(% of Sales) 4.1 3.2 3.9 3.4
Provision for Taxation 28.80 18.64 54.5 75.78 56.88 33.2
(% of PBT) 34.0 35.2 33.5 35.3
Reported PAT 55.92 34.37 62.7 150.41 104.09 44.5
PATM 2.72 2.09 2.6 2.2
Equity shares (cr) 20.6 17.5 20.6 17.5
EPS (Rs) 2.71 1.96 38.3 7.30 5.94 22.8
Net Sales 2,058 1,642 25.3 5,748 4,679 22.8
Consumption of RM 1,459 1,150 26.9 4,033 3,278 23.0
Source: Company, Angel Research
Key Highlights
Net Sales surge by 25.3%: Pantaloon Retail (PRIL), on a standalone basis, reported a
25.3% yoy growth in net sales to Rs2, 057.6cr. Higher SSS growth of 13.9% and 13.2%,
for value and lifestyle retailing, respectively, during 3QFY2010 (7% and 11%,
respectively, during 2QFY2010) enabled the company to post decent top-line growth.
Moreover, the Home Retailing format registered a stellar growth of 18.6%yoy (1% growth
in 2QFY2010). PRIL posted a total sales growth of 31%, 38.4% and 22.4% yoy,
respectively, for value retailing, lifestyle retailing and home retailing during the quarter.
Growth in the lifestyle retailing and Home retailing formats are encouraging signs, as
they clearly indicate that consumers are opening their wallets for discretionary spending.
We believe that a continuation of this trend would bode well for PRIL, thereby enabling it
to maintain its top-line growth, going ahead.
April 26, 2010 2

3. Pantaloon Retail I 3QFY2010 Result Update
Exhibit 2: Net Sales Growth Trend
2,400
2,100 12
1,800
9
1,500
1,200
(Rs cr)
6
(%)
900
600 3
300
0 0
2QFY2008
3QFY2008
4QFY2008
1QFY2009
2QFY2009
3QFY2009
4QFY2009
1QFY2010
2QFY2010
3QFY2010
Net Sales Growth (%)
Source: Company, Angel Research
Operating Margins remain flat: During the quarter, PRIL’s Operating profit
witnessed a 24.6% yoy growth to Rs215.6cr. The EBITDA margin stayed flat at
10.5% (on a yoy basis), which was slightly lower than our expectation. In percentage
to sales terms, the increase in the raw material cost of ~90bp was offset by a
decline in the staff costs and other overheads, thereby enabling the company to
maintain its margins.
Exhibit 3: EBITDA and Operating Margins
240
200 11.0 12
10.2 10.2 10.3 10.5 10.7 10.6 10.5
160 8.9
8.4
(Rs cr)
8
120
(%)
80
4
40
0 0
2QFY2008
3QFY2008
4QFY2008
1QFY2009
2QFY2009
3QFY2009
4QFY2009
1QFY2010
2QFY2010
3QFY2010
EBITDA EBITDA Margin
Source: Company, Angel Research
Bottom-line surges by 62.7%: PRIL’s bottom-line surged by 62.7% yoy to Rs55.9cr
(Rs34.4cr) during 3QFY2010. The interest cost has remained flat, with a marginal
1.3% rise on a yoy basis, mainly enabling the growth posted at the operating level to
trickle down further to the bottom-line. The Net Profit margin surged up by 60bp yoy
to 2.7% in 3QFY2010.
April 26, 2010 3

4. Pantaloon Retail I 3QFY2010 Result Update
Exhibit 4: Net Profit Trend and Net Profit Margins
60 4
50
2.6 2.6 2.7 3
2.4 2.4 2.4 2.5
40 2.2 2.2
2.1
(Rs cr)
(%)
30 2
20
1
10
0 0
2QFY2008
3QFY2008
4QFY2008
1QFY2009
2QFY2009
3QFY2009
4QFY2009
1QFY2010
2QFY2010
3QFY2010
Adjusted Profit After Extra-ordinary item Net Margin
Source: Company, Angel Research
Restructuring on track: PRIL is in the process of restructuring its entire business into
retail and non-retail ventures. It is dividing its businesses into three parts, namely,
retail, financial services and other support businesses. PRIL has transferred the value
business to its wholly-owned subsidiary, Future Value Retail Limited (FVRL). PRIL has
reported results for 3QFY2010 excluding FVRL (the erstwhile value retail segment of
PRIL, now a wholly-owned subsidiary). However, the company has also provided
results including the performance of FVRL for comparative purposes.
Outlook and Valuation
PRIL's presence across price points and categories helps the company to be in a
better position than its peers. Apart from positives like on-track retail space
expansion and a revival in consumer sentiment, we believe that the company's
restructuring initiative would enable it to enhance its focus on different segments and
would also provide it with a good opportunity of value unlocking. We estimate the
company to clock around a 27.5% and 42.4% CAGR in its revenues and bottom-
line, respectively, over FY2009-12E. At Rs423, the stock is trading at 20.8x its
FY2012E Earnings and at 2.4x FY2012E P/BV. Our SOTP Target for PRIL is Rs469
on FY2012E valuations, wherein we have valued its stake in FCH, HSRIL and Future
Generali at Rs31, Rs12 and Rs18, respectively. PRIL continues to be our Top Pick in
the Retail Sector. Considering its fair value of Rs469, we recommend an Accumulate
rating on the stock.
Exhibit 5: 1 year forward PE band
900
50x
800
700
600 35x
500
400 22x
300
200
10x
100
0
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Aug-09
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Apr-04
Apr-05
Apr-06
Apr-07
Apr-08
Apr-09
Apr-10
Source: Company, Angel Research
April 26, 2010 4

5. Pantaloon Retail I 3QFY2010 Result Update
Profit & Loss Statement (Standalone) Rs crore
Y/E June FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Net Sales 3,237 5,049 6,342 8,254 10,704 13,137
Other operating income - - - - - -
Total operating income 3,237 5,049 6,342 8,254 10,704 13,137
% chg 73.2 56.0 25.6 30.2 29.7 22.7
Total Expenditure 3,021 4,588 5,673 7,404 9,623 11,810
Net Raw Materials 2,209 3,512 4,430 5,762 7,472 9,170
Other Mfg costs 606 802 969 1,271 1,670 2,049
Personnel 206.1 274.1 274.3 371.4 481.7 591.2
Other - - - - - -
EBITDA 215.5 460.5 668.4 850.2 1,081.1 1,326.8
% chg 47.0 113.7 45.2 27.2 27.2 22.7
(% of Net Sales) 6.7 9.1 10.5 10.3 10.1 10.1
Depreciation& Amortisation 36.9 83.4 140.1 167.5 198.0 232.0
EBIT 178.7 377.1 528.4 682.7 883.1 1,094.8
% chg 56.5 111.1 40.1 29.2 29.4 24.0
(% of Net Sales) 5.5 7.5 8.3 8.3 8.3 8.3
Interest & other Charges 89.8 185.3 318.2 343.8 397.1 452.0
Other Income 31.9 3.8 9.1 5.8 9.8 7.8
(% of PBT) 26.4 1.9 4.1 1.7 2.0 1.2
Recurring PBT 120.8 195.6 219.2 344.7 495.8 650.7
% chg 50.6 61.9 12.1 57.3 43.8 31.2
Extraordinary Income/(Exp.) 60.10 - -
PBT (reported) 180.9 195.6 219.2 344.7 495.8 650.7
Tax 61.0 69.7 75.4 122.8 175.2 231.1
(% of PBT) 33.7 35.6 34.4 35.6 35.3 35.5
PAT (reported) 120.0 125.9 143.8 221.9 320.6 419.6
ADJ. PAT 59.9 125.9 143.8 221.9 320.6 419.6
% chg 15.7 110.3 14.2 54.3 44.5 30.9
(% of Net Sales) 1.8 2.5 2.3 2.7 3.0 3.2
Basic EPS (Rs) 4.1 7.9 7.6 10.8 15.6 20.4
Fully Diluted EPS (Rs) 4.1 7.9 7.6 10.8 15.6 20.4
% chg 190.5 93.8 (4.4) 42.5 44.5 30.9
April 26, 2010 5

6. Pantaloon Retail I 3QFY2010 Result Update
Balance Sheet (Standalone) Rs crore
Y/E June FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
SOURCES OF FUNDS
Equity Share Capital 29.4 31.9 38.1 41.2 41.2 41.2
Preference Capital - - - - - -
Reserves& Surplus 1,063 1,815 2,234 2,852 3,222 3,558
Shareholders Funds 1,092 1,847 2,272 2,893 3,263 3,599
Total Loans 1,300 2,192 2,850 3,327 3,753 4,139
Deferred Tax Liability 55.8 67.8 116.1 67.8 67.8 67.8
Total Liabilities 2,448 4,106 5,239 6,289 7,084 7,805
APPLICATION OF FUNDS
Gross Block 767 1,369 1,876 2,204 2,606 3,006
Less: Acc. Depreciation 92.5 175.9 307.7 480.5 678.5 910.5
Net Block 675 1,193 1,569 1,723 1,928 2,095
Capital Work-in-Progress 131.1 330.6 345.2 219.3 221.2 219.6
Goodwill - - - - - -
Investments 252 587 954 1,000 1,000 1,000
Current Assets 1,749 2,635 3,283 4,277 5,126 5,939
Cash 164 127 109 190 181 211
Loans & Advances 634 962 1,208 1,692 2,248 2,693
Other 952 1,545 1,965 2,395 2,697 3,035
Current liabilities 360 639 912 931 1,191 1,448
Net Current Assets 1,390 1,996 2,371 3,346 3,935 4,490
Total Assets 2,448 4,106 5,239 6,289 7,084 7,805
Cash Flow Statement Rs crore
Y/E June FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Profit before tax 180.9 195.6 219.2 344.7 495.8 650.7
Depreciation 36.9 83.4 140.1 167.5 198.0 232.0
Change in Working Capital (427.4) (593.3) (419.9) (429.9) (302.0) 338.0)
Less: Other income 31.9 3.8 9.1 5.8 9.8 7.8
Direct taxes paid 61.0 69.7 75.4 122.8 175.2 231.1
Cash Flow from Operations (302.5) (387.8) (145.1) (46.3) 206.8 305.8
(Inc)./ Dec in Fixed Assets (582.4) (980.0) (1,051.7) (719.0) (843.0) (608.4)
(Inc)./ Dec in Investments (90.3) (334.5) (367.5) (46.0) - -
(Inc)/ Dec in loans and advances (336.3) (328.5) (246.0) (483.9) (555.7) (445.2)
Other income 31.9 3.8 9.1 5.8 9.8 7.8
Cash Flow from Investing (977) (1,639) (1,656) (1,243) (1,389) (1,046)
Issue of Equity 2.5 2.5 6.2 3.2 - -
Inc./(Dec.) in loans 698.2 892.2 658.6 477.0 425.3 385.9
Dividend Paid (Incl. Tax) (7.5) (9.6) (11.4) (12.4) (12.4) (12.4)
Others 727.7 1,105.5 1,129.7 901.8 760.7 396.0
Cash Flow from Financing 1,421 1,991 1,783 1,370 1,174 770
Inc./(Dec.) in Cash 141.3 (36.3) (18.1) 80.3 (8.5) 29.6
Opening Cash balances 22.5 163.8 127.4 109.3 189.6 181.2
Closing Cash balances 163.8 127.4 109.3 189.6 181.2 210.7
April 26, 2010 6

7. Pantaloon Retail I 3QFY2010 Result Update
Key Ratios (Standalone)
Y/E June FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Valuation Ratio (x)
P/E (on FDEPS) 104.1 53.7 56.2 39.4 27.3 20.9
P/CEPS 64.4 32.3 28.5 22.5 16.9 13.4
P/BV 5.7 3.7 3.6 3.0 2.7 2.4
Dividend yield (%) 0.1 0.1 0.1 0.1 0.1 0.1
EV/Sales 3.1 2.1 1.8 1.5 1.2 0.9
EV/EBITDA 46.4 23.7 17.4 14.1 11.5 9.6
EV / Total Assets 4.1 2.7 2.2 1.9 1.8 1.6
Per Share Data (Rs)
EPS (Basic) 4.1 7.9 7.6 10.8 15.6 20.4
EPS (fully diluted) 4.1 7.9 7.6 10.8 15.6 20.4
Cash EPS 6.6 13.1 14.9 18.9 25.2 31.6
DPS 0.5 0.6 0.6 0.6 0.6 0.6
Book Value 74.4 115.9 119.4 140.4 158.3 174.6
Dupont Analysis
EBIT margin 5.5 7.5 8.3 8.3 8.3 8.3
Tax retention ratio 66.3 64.4 65.6 64.4 64.7 64.5
Asset turnover (x) 1.3 1.2 1.2 1.3 1.5 1.7
RoIC (Post-tax) 4.8 5.9 6.6 7.0 8.1 9.0
Cost of Debt (Post Tax) 6.3 6.8 8.3 7.2 7.3 7.4
Leverage (x) 1.1 1.1 1.2 1.1 1.1 1.1
Operating RoE 3.3 4.9 4.7 6.8 8.9 10.9
Returns (%)
RoCE (Pre-tax) 9.9 11.5 11.3 11.8 13.2 14.7
Angel RoIC (Pre-tax) 8.3 10.3 11.0 11.6 13.2 14.8
RoE 7.4 8.6 7.0 8.6 10.4 12.2
Turnover ratios (x)
Asset Turnover (Gross Block) 5.7 4.7 3.9 4.0 4.5 4.7
Inventory / Sales (days) 78.5 83.7 96.0 91.0 80.5 74.5
Receivables (days) 4.6 6.4 7.4 7.3 6.3 5.1
Payables (days) 36.5 39.7 49.9 45.4 40.2 40.8
WC cycle (ex-cash) (days) 101.6 111.9 118.9 119.8 117.8 111.6
Solvency ratios (x)
Net debt to equity 1.0 1.1 1.2 1.1 1.1 1.1
Net debt to EBITDA 5.3 4.5 4.1 3.7 3.3 3.0
Interest Coverage (EBIT / Interest) 2.0 2.0 1.7 2.0 2.2 2.4
April 26, 2010 7

8. Pantaloon Retail I 3QFY2010 Result Update
Research Team Tel: 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this
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arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved),
and should consult their own advisors to determine the merits and risks of such an investment.
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inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company
may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as
opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true,
and is for general guidance only. Angel Securities Limited has not independently verified all the information contained within this document. Accordingly, we
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use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section).
Disclosure of Interest Statement Pantaloon Retail
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock Yes
3. Angel and its Group companies’ Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below Rs 1 lakh for Angel and its Group companies.
Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059.
Tel : (022) 3952 4568 / 4040 3800
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE:
INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946
Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM /
CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
April 26, 2010 8