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Pantaloon Retail Below May 2009 levels

Pantaloon Retail – the owner of Big Bazaar – has been losing steam tremendously, and is down over 6% today to 253, the lowest it has been since, well May 2009.

The stock has been absolutely hammered all the way from the 520 levels it saw in October 2010.

 

Pantaloon Retail Chart

Weird things are happening there.

  • Harrish Zaveri at DB changed PANTALOONR from Buy to Hold.
  • Some crazy levels of restructuring have happened. They first merged some parts of subsidiaries with themselves (Home Solutions) and then demerged the entire mall development business into Agre Developers (another listed co) and the value retail businesses (Big Bazaar etc.) into a wholly owned subsidiary.
  • This means their results aren’t easily comparable with last year, and their standalone results are uncomparable.
  • In fact, the Indian data suckage means that NSE will display standalone results in their parsable HTML pages, while consolidated results are in TEXT inside a PDF. Well done. Buffoons.
  • Promoters had gotten about 2 cr. shares (including warrants) at Rs. 183 per share in 2009. Nice deal; but since they’re pledging shares, watch for that level as a note for when their lenders get all panicky.
  • They have a ton of "class B" shares which have differential voting rights (10 shares = 1 vote). Yesterday (Feb 8) they announced that a promoter group had lapped up another 35 lakh such class B shares (which are great for quasi-control!) Is that bad? I don’t know.
  • Results for the Dec Quarter will be out Feb 11.
  • Technically the stock could go down to 200. But people sitting and waiting for a correction have some hope – the stock has seen dwindling volumes and hopefully, will recover and sellers are exhausted.
  • Moneylife: they have erratic turnover and high interest costs.
  • Their interest costs suck – 123 cr. as interest (cons.) with a 24 cr. net profit. Just a % more on interest rates and they are, putting it lightly, fubared.
  • P/E is crazy: their SEP quarter showed Consolidated EPS of Rs. 1 or so. Last year had an EPS of 3.18, on a cons. level (year ends Jun for them). That means you’re STILL paying a P/E of 60 for this company.
  • I can’t imagine what took it to 520; but it’s important to understand that if you’re working this stock, you had better deal with momentum techniques compared to analyzing unnecessarily cryptic account statements. There is far more information in the price and volume.

Sorry for the note taking type of post – but I had to write them all down and don’t have the time to format them into coherent paragraphs. Would love your thoughts.

  • Anonymous says:

    >Speaking of results and cryptic financial statements, when we start adopting IFRS do you know if companies will also be required to:
    a) report consolidated results every quarter, b) report B/S also every quarter

    ??

    Often when i read result updates in newspapers, I have no idea if they are referring to consolidated or standalone. And there is almost never any balance sheet position overview.

    Data sucks in India for sure. Reporting requirements also suck.

    -PB

  • Rahul Bhatia says:

    >I like the note-taking method. It's so straightforward.