The retail sector in India has significant potential for growth as organized retail has low penetration currently. While online retail is booming, led by Amazon, the industry faces threats from a lack of clarity on foreign investment policies and the new government's stance on FDI. However, economic revival and increasing consumption are expected to provide opportunities for domestic organized players. The outlook for the long-term growth of the retail sector remains positive.

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Retail sector outlook
WealthRays Research Desk
Retail sector outlook
Retail sector in India is fragmented and organized retail has low penetration but carries huge potential to grow. Online retail growth is booming in India with major player like Amazon favouring India. Growing disposable income, easing inflation, govt.’s step to control food inflation, falling oil prices and revival in consumption presents strong prospects of growth in industry. Despite this, India lacks clarity on various policies like taxation of foreign players for investment in India and new govt.’s stance against FDI in multi brand retail poses threat to this sector. Going forward, the revival in economy and increase in consumption can be expected by early next year, RBI inflation target also seems achievable and new govt.’s plans to develop infrastructure and smart cities gives good opportunity for domestic organized players to tap growth potential in tier-II and tier- III cities. Outlook for retail sector remains positive for a long term. Future Retail Huge debt burden of the company has forced it to divest in Pantaloons. The profitability of the company is threatened by its interest cost as a result of debt burden. High same store sales growth is required for the company to trim its debt. Also, company seeks clarity on FPI investment in listed multi brand Retail Company. The company plans to raise Rs.2000 crores for better working capital management and debt reduction. The stock can be avoided at current levels and be kept on watch for investment as company demonstrates strong quarterly results. Shoppers Stop The company is adding stores and showed good volume growth of 5% in last quarter. The management plans to add 8 stores in FY15.Share of apparel segment was high in gross margin of the company. Management guidance on margin expansion is positive and the company has delivered last quarter. Financial performance of the company led by rising demand in textiles is expected to be strong in coming years. The stock can be accumulated by the investors for a long term investment of 2-3 years. Max India The company has reported strong Q1 results with 15% rise in operating revenues. The growth is led by insurance and healthcare segments of max life insurance which paid dividend to max India. FDI in insurance will further help the company. Packaging industry is also picking up. The stock is in a consolidation phase and may witness buying interest if company shows consistency. Arvind Lifestyle The stock has rallied more than 20% from August to mid-September on expectation strong operating cash flows which included acquisition of brands. The shares were seeing some correction after that period. The company is expecting more operating cash flows due to heavy investments in Gap and The Children’s Place. The company is targeting revenue of Rs. 1,000 crore from Gap and Rs. 500 crore from The Children’s Place in coming 4-5 years. Investors can keep an eye on this stock for long term investment.
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Retail sector outlook
WealthRays Research Desk
Retail sector outlook
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