Author: CP

You are Reading this First Here: Citigroup Research just a while ago upgraded India’s number one retailer – Pantaloon Retail India’s stock price target to Rs 626 from Rs 545. This upgrade is the outcome of London Investor conference on India.

Kishore Biyani and the Sr. Management of Pantaloon has indicated value unlocking exercise in its subsidiaries over the next three months, with the listing of Future Capital and private placements of Future Bazaar and Future Media. Future Capital will list within the next 3 months. Pantaloon expects a valuation of Rs25bn-30bn, while Citi values this at Rs18.6bn. Future Capital now has 75 retail locations and management expects a credit book of US$1.5-2bn by FY11, while assets under management are about US$1.2bn.

Management expects 10-15% dilution in the media & e-tailing subsidiaries through private equity placement. Management indicates a base valuation of US$50mn for Future Media and US$70mn for Future Bazaar. Future media has bought the on-screen media rights all of INOX Leisure screens for the next 30 months.

Pantaloon’s management is clearly shifting its focus from the top line towards margins and ROE. SOTP based price target to Rs626 (from Rs545 earlier), incorporating the value of Future Bazaar and Future Media, as well as rolling forward our target 30x P/E multiple for core Pantaloon to mid FY09E. Pantaloon Retail is expected to post diluted EPS of Rs 13.05 and Rs 16.51 for FY08 and FY09 respectively.

Key notes from the energy / oil / gas conference held in New Delhi.

The demand-supply gap in gas is likely to narrow sharply in the next few years. India’s energy mix looks set to change toward being more gas dependent, albeit marginally. Increasing gas supplies should lead to a quantum jump in cities under the CGD umbrella.
The evolving regulatory environment should facilitate growth in the sector.

We see that India’s dependence on oil is set to fall to 29% in the next 2 decades while dependence on Gas and Nuclear Energy will increase.

In fact, India’s expected dependence at 6% on Nuclear Energy in 2030 is higher than the global average of 5%. Estimated total gas demand in the economy to increase to ~280mmscmd by FY12E (~180 currently), while new and existing domestic supplies would increase to ~150mmscmd.

Apart from this, India will also lay 8,400 Kms of Gas pipeline at an estimated cost of $ 6 Billion. Most of this will be undertaken by GAIL and RIL.

If you are holding RIL, then just hold the stock tight for few more years or maybe another decade 🙂