Pantaloon: Festive cheer

Pantaloon sales rev up in October

Pantaloon Retail's October sales figures have shown considerable improvement, thanks to a significant portion of pre-festival shopping on account of Diwali in the first week of November.

Last year, Diwali was during mid-November and the seasonal pick-up in demand was also observed in the company's sales figures for November. Meanwhile, improved last month sales figures helped the stock rise about 5 per cent to Rs 1,835 on Wednesday.

This pre-festival shopping in October 2005 helped the company's high margin same-store lifestyle retailing (under the Pantaloons brand) show a growth of 45.83 per cent over October 2004. In contrast, this business segment in September 2005 had grown at a considerably slower pace of 11.19 per cent.

Like earlier months, Pantaloon's value retailing business (Big Bazaar and Food Bazaar) has grown faster than the lifestyle retailing""same-store value retailing segment expanded at a scorching pace of 52.23 per cent in October 05 over October 2004.

The topline growth for October was driven by new store sales, which resulted in a growth of 161.62 per cent in value retailing and 124.31 per cent in lifestyle retailing over October 2004.

Analysts point out that within the value retailing business, the share of low-margin food business is growing at a faster pace. This strategy has also helped same-store value retailing business to expand 34.5 per cent between July and October 2005 over previous corresponding period.

However, faster growth in this lower margin business has resulted in the company's operating profit margin dipping 137 basis points to 7.66 per cent in September 2005 quarter over previous corresponding period.

Nevertheless, the street's infatuation for this sector has helped this stock rise about 9.4 per cent over the last month as compared to a 1.9 per cent fall in the Sensex.

Going forward, the company is clearly ramping up its store network aggressively especially in smaller towns. However, the street appears to have factored in the growth opportunities with the stock trading at almost 58.5 times estimated 2005-06 earnings.

GSM phones ringing loud

For mobile phone companies, it has been a great Diwali. After crossing the 50 million mark in September 2005, total GSM subscriber base increased by 4.15 per cent to almost 53 million. The addition in numbers of 2.1 million subscribers is the highest ever.

The GSM subscriber base has grown 52.2 per cent over October 2004. The growth in new subscribers is higher in B and C circles than in metros and the A circle states.

The B circles of states such as Punjab, Uttar Pradesh, Kerala and Madhya Pradesh are closing the gap with A circle states of Andhra Pradesh, Maharashtra, Gujarat, Karnataka and Tamil Nadu. The percentage of B circle states in total Indian GSM consumers has gone up from 30 per cent in October 2004 to 32.6 per cent.

Growth in metros too has slowed down as is evident from their share falling from 27.8 per cent a year ago to 24.6 per cent last month. The share of subscribers in A circle states has fallen from 36.6 per cent in October 2004 to 35 per cent now.

The growth in the C circle states such as Bihar, Orissa and Himachal Pradesh is much higher from 1.8 million subscribers in October 2004 to 4 million subscribers now, the absolute numbers are still small.

B and C circles have provided the major growth over previous month too. B circle subscribers grew by 4.3 per cent whereas C circle subscribers rose by 6.7 per cent. GSM is making inroads beyond the metros and the more affluent states.

Bharti's subscriber base grew by 0.67 million to 14.7 million subscribers. The Bharti stock price closed 1 per cent higher.

With contributions from Amriteshwar Mathur