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Aditya Birla Fashion and Retail (ABFRL) clocked lower revenue growth in Q2FY18 (3.9% YoY dip) due to advancement of EOSS to June. Overall numbers were weak—2% YoY LTL dip in retail lifestyle brands and 11% YoY LTL fall in Pantaloons. However, strong pick up in retail lifestyle brands (up 21% YoY in September versus 16% YoY dip in July) and in Pantaloons (up 23% YoY in September versus 32% YoY dip in July) is positive. We are enthused by Pantaloons’ stronghold in women’s wear, ramp up in Forever21 (breakeven expected in H2FY18) and entry in the innerwear segment (No. 2 brand in premium mens’ innerwear). Maintain ‘BUY’.
Early EOSS and GST roll out dent growth
Q2FY18 was a muted quarter for the apparel industry due to early EOSS in June. While
ABFRL’s lifestyle brands’ sales dipped 7% YoY, Pantaloons reported 2% YoY growth; the
sales growth would have been 2% higher each excluding the GST impact. Further, while
cost of new Pantaloons stores was included in Q2FY18, muted revenue therein
impacted EBITDA margin—4.7% in Q2FY18 versus 7.2% in Q2FY17. Management
believes, right sizing of Forever 21 stores and shifting to variable rent are likely to lead to
breakeven in H2FY18. ABFRL is also building blocks for its innerwear business (point of
sales increased from 1,300 in FY17 to 3,400 as of Q2FY18).
Q2FY18 conference call: Key takeaways
The company has effected 7‐12% price cuts for products priced at lower than INR1,000.
ABFRL is planning to add 100‐120 lifestyle stores (net) in FY18. It added 36 Pantaloons
stores (30 stores in Q2FY18) in H1FY18 and similar number is anticipated in H2FY18.
Typically, there is 5% gross margin differential between Q1 and Q2 due to EOSS.
Pantaloons’ own share stood at ~61% in Q2FY18. The company does not perceive any
dramatic change in own share in the short term. Management estimates Forever 21 to
post 6‐7% EBITDA margin post maturity.
Outlook and valuations: Primed for growth; maintain ‘BUY’
Anchored by anticipated revival in Madura and Pantaloons, we are confident of
resumption of robust growth trajectory. We maintain 20x FY19E EV/EBITDA and arrive
at target price of INR193. The stock is currently trading at 15.9x FY19E EV/EBITDA. We
maintain ‘BUY/SO’.
RESULT UPDATE
ADITYA BIRLA FASHION AND RETAIL
Early sale season, GST hit sales; recovery on cards
EDELWEISS 4D RATINGS
Absolute Rating BUY
Rating Relative to Sector Outperform
Risk Rating Relative to Sector Low
Sector Relative to Market Underweight
MARKET DATA (R: PNTA.BO, B: ABFRL IN)
CMP : INR 149
Target Price : INR 193
52‐week range (INR) : 189 / 127
Share in issue (mn) : 771.6
M cap (INR bn/USD mn) : 115 / 1,764
Avg. Daily Vol.BSE/NSE(‘000) : 646.5 SHARE HOLDING PATTERN (%)
Current Q1FY18 Q4FY17
Promoters *
59.3 59.3 59.3
MF's, FI's & BK’s 14.7 14.7 15.0
FII's 11.7 11.7 11.1
Others 14.4 14.4 14.5
* Promoters pledged shares (% of share in issue)
: NIL
PRICE PERFORMANCE (%)
Stock Nifty
EW Retail Index
1 month (2.8) 6.0 7.8
3 months (12.4) 3.0 7.4
12 months (6.9) 19.8 23.3
Abneesh Roy +91 22 6620 3141
Rajiv Berlia +91 22 6623 3377
Alok Shah +91 22 6620 3040
India Equity Research| Retail
October 27, 2017
Financials (INR mn)
Year to March Q2FY18 Q2FY17 % change Q1FY18 % change FY17 FY18E FY19E
Net rev. 18,040 18,770 (3.9) 17,600 2.5 66,029 74,868 84,077
EBITDA 930 1,660 (44.0) 740 25.7 4,375 5,989 8,324
Adjusted Profit (100) 650 NM (200) NM 535 1,537 3,192
Dilu. EPS (INR) (0.1) 0.8 NM (0.3) NM 0.7 2.0 4.2
Dilu.P/E (x) 213.5 74.4 35.8
EV/EBITDA (x) 31.1 22.6 15.9
ROAE (%) 5.7 14.9 25.1
Retail
2 Edelweiss Securities Limited
Table 1: Trends at a glance
Source: Company, Edelweiss research
Q2FY18 concall: Key takeaways
GST
ABFRL undertook 7% to 12% price corrections for products priced at lower than
INR1,000
The company hasn’t taken any price hike in products priced above INR1,000 and impact
was very low
Lifestyle and Pantaloons would have clocked 2% higher sales growth each, excluding
the impact of GST
Lifestyle brands
Sales declined in July due to early EOSS in June
LTL retail fell 2% YoY in Q2FY18 (11% YoY LTL retail growth in H1FY18)
26 stores were added taking overall count to 1,769 stores
In FY18, the company will have net addition of 100‐120 stores
Pantaloons
Renovation of Pantaloons and depressed consumer sentiment post GST impacted sales
growth
Full cost of new store opening came in Q2FY18 which impacted EBITDA margin
SSG declined 11% YoY in Q2FY18
Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18
Revenues (INRmn) 10,620 9,320 8,420 11,710 10,558 10,450 10,500 11,190
‐ Lifestyle brands NA 8,740 7,790 10,540 9,090 9,090 8,910 9,770
‐ Fast Fashion NA 330 390 880 1,160 1,020 1,200 970
‐ Other businesses NA 240 240 290 320 340 390 450
EBITDA (INR mn) 630 950 470 1,140 630 1,170 370 1,020
‐ Lifestyle brands NA 1,090 550 1,380 880 1,420 640 1,300
‐ Fast Fashion NA (50) (20) (130) (150) (190) (140) (120)
‐ Other businesses NA (90) (60) (110) (80) (60) (130) (160)
EBITDA margin (%) 5.9 10.2 5.6 9.7 6.0 11.2 3.5 9.1
‐ Lifestyle brands NA 12.5 7.1 13.1 9.7 15.6 7.2 13.3
‐ Fast Fashion NA (15.2) (5.1) (14.8) (12.9) (18.6) (11.7) (12.4)
‐ Other businesses NA (37.5) (25.0) (37.9) (25.0) (17.6) (33.3) (35.6)
EBIT (INRmn) 434 726 284 895 372 864 140 430
EBO's (Nos.) 1,842 1,877 1,856 1,841 1,895 1,878 1,862 1,893
SSG (%) 4.6 (6.6) (4.0) (10.0) (7.0) 0.2 21.0 (2.0)
Revenues (INRmn) 5,930 5,342 5,740 7,267 6,666 5,857 7,310 7,400
EBITDA (INR mn) 380 (21) 260 520 330 140 460 350
EBIT (INRmn) 19 (1,079) (71) 175 (59) (218) 100 10
EBITDA margin (%) 6.4 (0.4) 4.5 7.2 5.0 2.4 6.3 4.7
EBIT margin (%) 0.3 (20.2) (1.2) 2.4 (0.9) (3.7) 1.4 0.1
SSG (%) 18.7 2.9 16.0 6.2 (1.8) (5.0) 14.0 (11.0)
Madura
Pantaloons
Key metrics
Aditya Birla Fashion and Retail
3 Edelweiss Securities Limited
The company added 36 stores (30 stores in Q2FY18) in H1FY18. It is expected add
similar number in H2FY18
Franchisee stores: 36
Total number of Pantaloons stores: 243 (172 in Q2FY17)
Typically, 5% gross margin differential between Q1 and Q2 (EOSS impacts gross margin
in Q2FY18)
Pantaloons’ own share stood at ~61%. The company doesn’t see any dramatic change
in own share in short term
Fast Fashion
Expects to breakeven in H2FY18
Added 2 and closed 2 Forever stores. Therefore, overall store count now stands at 18
SSG was double digit negative for Forever 21
The company has shifted from fixed to variable rent in Forever 21
Forever 21 will have 6‐7% EBITDA margin in steady state business
Other businesses (Innerwear)
Exclusive outlets: 5
In FY19, the company will open more exclusive stores
Currently, it is not looking at extending the innerwear brand to other brands apart from
Van Heusen
The company has 3,400 point of sales in 12 months of operation
It is a very important pipeline which will help build many more brands/products
ABOF
The company proposes to acquire ABOF brand for INR00‐150mn
It is available in shop‐in‐shop format in certain Pantaloons stores. If it does well, then
the company will look at more shop‐in‐shop formats
It will also be available at other ecommerce companies
Rent cost
Input credit was availed which resulted in lower rental cost
The company also renegotiated rent for many stores
Other key takeaways
Debt: INR1,9460mn
International brands
Ted Baker to be launched in Q3FY18
American Eagle to be launched in Q4FY18
Retail
4 Edelweiss Securities Limited
Outlook and valuations: Primed for growth; maintain ‘BUY’
ABFRL is the No.1 player in men’s wear on account of Madura. The company is No. 1 in
women’s wear too on account of Pantaloons. It will be key beneficiary of recovery in
discretionary spending and is better placed to gain from it than other branded apparel
players owing to its sheer scale and widespread network.
Madura’s growth and margins, which were impacted by heightened competition from e‐
commerce players, higher ad spends and lower operating leverage, have likely bottomed
out. We envisage gradual recovery riding renewed focus on new & fast‐growing segments to
aid growth and improve throughput per outlet. Entry in the online segment and focus on
becoming the largest brand therein are also bound to boost long‐term growth. ABFRL has
completed restructuring of Madura and aligned inventory. Hence, growth should continue
for Madura.
Pantaloons is a turnaround story and is expected to sustain its robust run and gradual
margin improvement. We expect the company to record decent SSSG led by new business
model with focus on right pricing and fashion. The company’s initiatives like increasing
private labels, enhancing inventory turns and reducing sale season period are bound to lead
to sustained margin improvement.
Anchored by anticipated revival in Madura and Pantaloons, we are confident of resumption
of robust growth trajectory. We maintain 20x FY19E EV/EBITDA and arrive at target price of
INR193. We maintain ‘BUY/SO’.
Aditya Birla Fashion and Retail
5 Edelweiss Securities Limited
Financial snapshot (INR mn) Year to March Q2FY18 Q2FY17 % change Q1FY18 % change YTD18 FY18E FY19E
Net revenues 18,040 18,770 (3.9) 17,600 2.5 35,640 74,868 84,077 Raw material costs 8,660 8,760 (1.1) 8,330 4.0 16,990 34,140 37,666
Employee expenses 1,970 1,890 4.2 1,930 2.1 3,900 7,786 8,492
Lease charges 2,370 2,440 (2.9) 2,850 (16.8) 5,220 11,380 12,275
Other expenses 4,110 4,020 2.2 3,750 9.6 7,860 15,573 17,320
Total expenditure 17,110 17,110 0.0 16,860 1.5 33,970 68,879 75,753
EBITDA 930 1,660 (44.0) 740 25.7 1,670 5,989 8,324
Depreciation 670 600 11.7 590 13.6 1,260 2,768 3,134
EBIT 260 1,060 (75.5) 150 73.3 410 3,221 5,190
Other income 70 70 0.0 80 (12.5) 150 450 450
Interest 430 480 (10.4) 430 0.0 860 1,750 1,650
Profit before tax (100) 650 NA (200) NA (300) 1,921 3,990
Provision for taxes ‐ ‐ ‐ ‐ 384 798
Associate profit share
Profit‐ Discontinued Ops
Reported net profit (100) 650 NA (200) NA (300) 1,537 3,192
Adjusted Profit (100) 650 NA (200) NA (300) 1,537 3,192
Diluted shares (mn) 769 769 769 769 769 769
Adjusted Diluted EPS (0.1) 0.8 NA (0.3) NA (0.4) 2.0 4.2
Diluted P/E (x) ‐ ‐ ‐ ‐ 74.4 35.8
EV/EBITDA (x) ‐ ‐ ‐ ‐ 22.6 15.9
ROAE (%) ‐ ‐ ‐ ‐ 14.9 25.1
COGS 48.0 46.7 47.3 47.7 45.6 44.8
Employee cost 10.9 10.1 11.0 10.9 10.4 10.1
Lease charges 13.1 13.0 16.2 14.6 15.2 14.6
Other expenses 22.8 21.4 21.3 22.1 20.8 20.6
EBITDA 5.2 8.8 4.2 4.7 8.0 9.9
EBIT 1.4 5.6 0.9 1.2 4.3 6.2
PBT (0.6) 3.5 (1.1) (0.8) 2.6 4.7
Adjusted net profit (0.6) 3.5 (1.1) (0.8) 2.1 3.8
Retail
6 Edelweiss Securities Limited
Company Description
In May 2015, ABFRL came into being following consolidation of ABNL's branded apparel
business of Madura and Pantaloons. Post consolidation, Pantaloons was renamed Aditya
Birla Fashion and Retail (ABFRL).ABFRL brings with it learnings and businesses of 2
renowned Indian fashion icons/brands, Madura and Pantaloons. This amalgamation has
helped ABFRL emerge as India’s No. 1 fashion lifestyle entity.
Madura has a vast retail network comprising exclusive outlets, premium multi‐brand and
department stores – total presence of 1877 stores. Four of its brands are among India's top
fashion names, with MRP sales in excess of INR10bn each. Pantaloons brand is now present
in 78 plus Indian cities/towns through 146 stores. Forever21 is a fashion retailer of
women’s, men’s and kids clothing and accessories and is known for offering the hottest,
most current fashion trends at great value to consumers. Investment Theme
Aditya Birla Fashion and Retail (ABFRL) is one of the largest branded clothing players with 5
brands clocking >INR10bn sales each. ABFRL has now ventured into fast fashion via Forever
21and innerwear under the Van Heusenbrand thereby now housing full bouquet of
segments in the apparel category. Anchored by these potent growth boosters, we estimate
ABFRL to post sales and EBITDA CAGR of 16.4% and 29.2%, respectively, over FY16‐19 and
24.1% RoE by FY19.
Key Risks
Slow GDP revival leading to lower traction in discretionary spending
While foreign brands such as Zara, Tommy Hilfiger, etc., have already established
themselves, other brands such as H&M, GAP, among others, are venturing inthe Indian
market thereby heightening competition.
Implementation of GST with anticipated tax neutral rate of 18%could lead to higher tax
outgo of 5‐7% for branded apparel players.
7 Edelweiss Securities Limited
Aditya Birla Fashion and Retail
Financial Statements
Income statement (INR mn)
Year to March FY16 FY17 FY18E FY19E
Net revenue 60,339 66,029 74,868 84,077
Materials costs 27,518 30,087 34,140 37,666
Gross profit 32,822 35,942 40,728 46,410
Employee costs 6,205 7,058 7,786 8,492
Rent and lease expenses 9,032 10,871 11,380 12,275
Other Expenses 13,801 13,638 15,573 17,320
EBITDA 3,784 4,375 5,989 8,324
Depreciation 3,381 2,425 2,768 3,134
EBIT 403 1,951 3,221 5,190
Add: Other income 263.7 381.5 450.00 450.00
Less: Interest Expense 1,765 1,797 1,750 1,650
Profit Before Tax (1,098) 536 1,921 3,990
Less: Provision for Tax ‐ ‐ 384 798
Reported Profit (1,098) 536 1,537 3,192
Adjusted Profit (1,098) 536 1,537 3,192
Shares o /s (mn) 769 769 769 769
Diluted shares o/s (mn) 769 769 769 769
Adjusted Diluted EPS (1.4) 0.7 2.0 4.2
Common size metrics
Year to March FY16 FY17 FY18E FY19E
Rent and lease expenses 15.0 16.5 15.2 14.6
Materials costs 45.6 45.6 45.6 44.8
EBITDA margins 6.3 6.6 8.0 9.9
Net Profit margins (1.8) 0.8 2.1 3.8
Growth ratios (%)
Year to March FY16 FY17 FY18E FY19E
Revenues 226.0 9.4 13.4 12.3
EBITDA 420.5 15.6 36.9 39.0
Adjusted Profit ‐ ‐ 187.0 107.7
EPS ‐ ‐ 187.0 107.7
Key Assumptions
Year to March FY16 FY17 FY18E FY19E
Macro
GDP(Y‐o‐Y %) 7.2 6.5 7.1 7.7
Inflation (Avg) 4.9 4.5 4.0 4.5
Repo rate (exit rate) 6.8 6.3 5.8 5.8
USD/INR (Avg) 65.0 67.5 66.0 66.0
Company
Revenue growth Pantaloon 16.5 18.3 15.8 17.6
Revenue growth Madura 6.5 3.4 11.3 9.0
SSSG growth ‐ Pantaloon (%) 5.9 3.3 4.0 9.0
SSSG growth EBOs ‐ Madura (%) ‐ (6.7) 3.0 6.0
Net Store addition ‐ Pantaloon 29.0 46.0 58.0 48.0
Net Store addition ‐ Madura 142.0 5.0 60.0 80.0
Forever 21 (revenue growth %) ‐ 31.7 36.1 26.4
Pantaloons ‐ EBITDA as % of sales 4.8 4.9 6.8 12.8
Madura ‐ EBITDA as % of sales 7.6 8.5 9.8 9.0
Tax rate (%) ‐ ‐ 20.0 20.0
Capex (INR mn) 2,128 3,031 3,129 3,006
Debtor days 10 21 21 21
Inventory days 122 172 172 172
Payable days 115 181 181 181
Cash conversion cycle 16 13 13 13
Dep. (% gross block) 50.3 28.2 26.0 25.0
8 Edelweiss Securities Limited
Retail
Peer comparison valuation
Market cap EV / EBITDA (X) EV / Sales (X) ROAE (%)
Name (USD mn) FY18E FY19E FY18E FY19E FY18E FY19E
Aditya Birla Fashion and Retail Ltd 1,764 22.6 15.9 1.8 1.6 14.9 25.1
Future Lifestyle Fashions Limited 1,037 16.3 12.3 1.8 1.4 7.4 11.5
Shoppers Stop 713 20.2 14.0 1.0 1.0 2.7 16.0
Titan Company 8,052 33.8 26.2 3.1 2.6 21.8 24.3
Wonderla Holidays 316 18.7 13.0 6.2 5.4 12.2 15.9
Median ‐ 20.2 14.0 1.8 1.6 12.2 16.0
AVERAGE ‐ 22.3 16.3 2.8 2.4 11.8 18.6
Source: Edelweiss research
Profitability and efficiency ratios
Year to March FY16 FY17 FY18E FY19E
ROAE (%) (17.5) 5.7 14.9 25.1
ROACE (%) 2.9 7.7 11.0 15.4
Inventory Days 122 172 172 172
Debtors Days 10 21 21 21
Payable Days 115 181 181 181
Cash Conversion Cycle 16 13 13 13
Current Ratio 1.3 1.3 1.4 1.5
Gross Debt/EBITDA 5.2 5.1 4.0 2.9
Gross Debt/Equity 2.2 2.3 2.1 1.7
Adjusted Debt/Equity 2.2 2.3 2.1 1.7
Interest Coverage Ratio 0.2 1.1 1.8 3.1
Operating ratios
Year to March FY16 FY17 FY18E FY19E
Total Asset Turnover 2.6 2.1 2.2 2.3
Fixed Asset Turnover 3.1 2.7 3.0 3.3
Equity Turnover 9.6 7.1 7.2 6.6
Valuation parameters
Year to March FY16 FY17 FY18E FY19E
Adj. Diluted EPS (INR) (1.4) 0.7 2.0 4.2
Y‐o‐Y growth (%) ‐ (148.8) 187.0 107.7
Adjusted Cash EPS (INR) 3.0 3.9 5.6 8.2
Diluted P/E (x) (104.2) 213.5 74.4 35.8
P/B (x) 12.6 11.9 10.3 8.0
EV / Sales (x) 2.2 2.1 1.8 1.6
EV / EBITDA (x) 35.3 31.1 22.6 15.9
Balance sheet (INR mn)
As on 31st March FY16 FY17 FY18E FY19E
Share capital 7,726 7,733 7,728 7,728
Reserves & Surplus 1,329 1,849 3,386 6,578
Shareholders' funds 9,055 9,582 11,114 14,306
Total Borrowings 19,761 22,213 23,800 23,800
Long Term Liabilities 541 756 756 756
Sources of funds 29,357 32,551 35,669 38,861
Gross Block 6,485 7,916 9,846 11,652
Net Block 5,280 6,275 4,832 3,725
Capital work in progress 254 250 250 250
Intangible Assets 17,952 18,596 20,400 21,379
Total Fixed Assets 23,486 25,121 25,481 25,354
Non current investments 1,662 2,184 2,184 2,184
Cash and Equivalents 533 676 2,994 5,827
Inventories 14,105 14,313 17,934 17,643
Sundry Debtors 3,124 4,539 4,150 5,607
Loans & Advances 2,165 2,565 2,566 2,566
Other Current Assets 749 962 972 981
Current Assets (ex cash) 20,143 22,378 25,621 26,798
Trade payable 14,298 15,511 18,314 19,004
Other Current Liab 2,169 2,297 2,297 2,297
Total Current Liab 16,467 17,808 20,611 21,302
Net Curr Assets‐ex cash 3,676 4,571 5,010 5,496
Uses of funds 29,357 32,551 35,669 38,861
BVPS (INR) 11.8 12.5 14.5 18.6
Free cash flow (INR mn)
Year to March FY16 FY17 FY18E FY19E
Reported Profit (1,098) 536 1,537 3,192
Interest (Net of Tax) 1,765 1,797 1,400 1,320
Others (198) (113) (100) (120)
Less: Changes in WC 741 461 430 477
Operating cash flow 3,109 4,183 5,176 7,049
Less: Capex 2,128 3,031 3,129 3,006
Free Cash Flow 981 1,152 2,046 4,042
9 Edelweiss Securities Limited
Aditya Birla Fashion and Retail
Top 10 holdings
Perc. Holding Perc. Holding
Templeton Asset Mgmt 4.99 Turquoise Investments & Finance 4.34
Life Insurance Corp Of India 4.10 Franklin Resources 3.09
Birla Group Holdings Pvt 2.43 Reliance Capital Trustee Co Ltd 1.58
Hsbc Global Inv Mauritius 1.08 Dimensional Fund Advisors Lp 1.07
BNP Paribas 0.97 Hsbc 0.97
*as per last available data
Insider Trades Reporting Data Acquired / Seller B/S Qty Traded
No Data Available
*in last one year
Bulk Deals Data Acquired / Seller B/S Qty Traded Price
No Data Available
*in last one year
Additional Data
Directors Data Mr. PranabBarua Managing Director Mr. Sushil Agarwal Non‐Executive Director
Mr. ArunThiagarajan Non Executive ‐ Independent Director Mr. Bharat Patel Non Executive ‐ Independent Director
Ms. Sukanya Kripalu Non Executive ‐ Independent Director Mr. Sanjeeb Chaudhuri Non Executive ‐ Independent Director
Auditors ‐ M/s SRBC & Co. LLP
*as per last annual report
10 Edelweiss Securities Limited
Company Absolute
reco Relative
reco Relative
risk
Company Absolute
reco
Relative
reco
Relative
Risk
Aditya Birla Fashion and Retail Ltd BUY SO L Future Lifestyle Fashions Limited BUY SO L
Future Retail BUY SO H Jubilant Foodworks HOLD SP M
Shoppers Stop BUY SO L Titan Company BUY SO L
Wonderla Holidays BUY SP M
RATING & INTERPRETATION
ABSOLUTE RATING
Ratings Expected absolute returns over 12 months
Buy More than 15%
Hold Between 15% and - 5%
Reduce Less than -5%
RELATIVE RETURNS RATING
Ratings Criteria
Sector Outperformer (SO) Stock return > 1.25 x Sector return
Sector Performer (SP) Stock return > 0.75 x Sector return
Stock return < 1.25 x Sector return
Sector Underperformer (SU) Stock return < 0.75 x Sector return
Sector return is market cap weighted average return for the coverage universe within the sector
RELATIVE RISK RATING
Ratings Criteria
Low (L) Bottom 1/3rd percentile in the sector
Medium (M) Middle 1/3rd percentile in the sector
High (H) Top 1/3rd percentile in the sector
Risk ratings are based on Edelweiss risk model
SECTOR RATING
Ratings Criteria
Overweight (OW) Sector return > 1.25 x Nifty return
Equalweight (EW) Sector return > 0.75 x Nifty return
Sector return < 1.25 x Nifty return
Underweight (UW) Sector return < 0.75 x Nifty return
11 Edelweiss Securities Limited
Aditya Birla Fashion and Retail
Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.
Board: (91‐22) 4009 4400, Email: [email protected]
Aditya Narain
Head of Research
Coverage group(s) of stocks by primary analyst(s): Retail
Aditya Birla Fashion and Retail Ltd, Future Lifestyle Fashions Limited, Future Retail, Jubilant Foodworks, Shoppers Stop, Titan Company, Wonderla Holidays
Distribution of Ratings / Market Cap
Edelweiss Research Coverage Universe
Rating Distribution* 161 67 11 240* 1stocks under review
Market Cap (INR) 156 62 11
Date Company Title Price (INR) Recos
Recent Research
26‐Oct‐17 Jubilant Foodworks
Sales inline; ongoing cost rationalisation paying off ; Result Update
1,643 Hold
06‐Oct‐17 FutureRetail
HyperCity buy: Bolstering consolidation; Company Update
528 Buy
06‐Oct‐17 ShoppersStop
HyperCity sale: The winning stroke; Company Update
508 Buy
> 50bn Between 10bn and 50 bn < 10bn
Buy Hold Reduce Total
Rating Interpretation
Buy appreciate more than 15% over a 12‐month period
Hold appreciate up to 15% over a 12‐month period
Reduce depreciate more than 5% over a 12‐month period
Rating Expected to
One year price chart
100
120
140
160
180
200
Oct‐16
Nov‐16
Dec‐16
Jan‐17
Feb‐17
Mar‐17
Apr‐17
May‐17
Jun‐17
Jul‐17
Aug‐17
Sep‐17
Oct‐17
(INR)
Aditya Birla Fashion and Retail
12 Edelweiss Securities Limited
Retail
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We offer our research services to clients as well as our prospects. Though this report is disseminated to all the customers simultaneously, not all customers may receive this report at the same time. We will not treat recipients as customers by virtue of their receiving this report.
ESL and its associates, officer, directors, and employees, research analyst (including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the Securities, mentioned herein or (b) be engaged in any other transaction involving such Securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company/company(ies) discussed herein or act as advisor or lender/borrower to such company(ies) or have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public appearance. ESL may have proprietary long/short position in the above mentioned scrip(s) and therefore should be considered as interested. The views provided herein are general in nature and do not consider risk appetite or investment objective of any particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business with ESL.
13 Edelweiss Securities Limited
Aditya Birla Fashion and Retail
ESL or its associates may have received compensation from the subject company in the past 12 months. ESL or its associates may have managed or co‐managed public offering of securities for the subject company in the past 12 months. ESL or its associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report. Research analyst or his/her relative or ESL’s associates may have financial interest in the subject company. ESL and/or its Group Companies, their Directors, affiliates and/or employees may have interests/ positions, financial or otherwise in the Securities/Currencies and other investment products mentioned in this report. ESL, its associates, research analyst and his/her relative may have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public appearance.
Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i) exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed exchange controls which could affect the value of the currency. Investors in securities such as ADRs and Currency Derivatives, whose values are affected by the currency of an underlying security, effectively assume currency risk.
Research analyst has served as an officer, director or employee of subject Company: No
ESL has financial interest in the subject companies: No
ESL’s Associates may have actual / beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report.
Research analyst or his/her relative has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No
ESL has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No
Subject company may have been client during twelve months preceding the date of distribution of the research report.
There were no instances of non‐compliance by ESL on any matter related to the capital markets, resulting in significant and material disciplinary action during the last three years except that ESL had submitted an offer of settlement with Securities and Exchange commission, USA (SEC) and the same has been accepted by SEC without admitting or denying the findings in relation to their charges of non registration as a broker dealer.
A graph of daily closing prices of the securities is also available at www.nseindia.com
Analyst Certification:
The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.
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Disclaimer for U.S. Persons
This research report is a product of Edelweiss Securities Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker‐dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker‐dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.
This report is intended for distribution by Edelweiss Securities Limited only to "Major Institutional Investors" as defined by Rule 15a‐6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor.
14 Edelweiss Securities Limited
Retail
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The contents of this research report have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA"). In the United Kingdom, this research report is being distributed only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the “Order”); (b) persons falling within Article 49(2)(a) to (d) of the Order (including high net worth companies and unincorporated associations); and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). This research report must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this research report relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this research report or any of its contents. This research report must not be distributed, published, reproduced or disclosed (in whole or in part) by recipients to any other person. Disclaimer for Canadian Persons
This research report is a product of Edelweiss Securities Limited ("ESL"), which is the employer of the research analysts who have prepared the research report. The research analysts preparing the research report are resident outside the Canada and are not associated persons of any Canadian registered adviser and/or dealer and, therefore, the analysts are not subject to supervision by a Canadian registered adviser and/or dealer, and are not required to satisfy the regulatory licensing requirements of the Ontario Securities Commission, other Canadian provincial securities regulators, the Investment Industry Regulatory Organization of Canada and are not required to otherwise comply with Canadian rules or regulations regarding, among other things, the research analysts' business or relationship with a subject company or trading of securities by a research analyst. This report is intended for distribution by ESL only to "Permitted Clients" (as defined in National Instrument 31‐103 ("NI 31‐103")) who are resident in the Province of Ontario, Canada (an "Ontario Permitted Client"). If the recipient of this report is not an Ontario Permitted Client, as specified above, then the recipient should not act upon this report and should return the report to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any Canadian person. ESL is relying on an exemption from the adviser and/or dealer registration requirements under NI 31‐103 available to certain international advisers and/or dealers. Please be advised that (i) ESL is not registered in the Province of Ontario to trade in securities nor is it registered in the Province of Ontario to provide advice with respect to securities; (ii) ESL's head office or principal place of business is located in India; (iii) all or substantially all of ESL's assets may be situated outside of Canada; (iv) there may be difficulty enforcing legal rights against ESL because of the above; and (v) the name and address of the ESL's agent for service of process in the Province of Ontario is: Bamac Services Inc., 181 Bay Street, Suite 2100, Toronto, Ontario M5J 2T3 Canada. Disclaimer for Singapore Persons
In Singapore, this report is being distributed by Edelweiss Investment Advisors Private Limited ("EIAPL") (Co. Reg. No. 201016306H) which is a holder of a capital markets services license and an exempt financial adviser in Singapore and (ii) solely to persons who qualify as "institutional investors" or "accredited investors" as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore ("the SFA"). Pursuant to regulations 33, 34, 35 and 36 of the Financial Advisers Regulations ("FAR"), sections 25, 27 and 36 of the Financial Advisers Act, Chapter 110 of Singapore shall not apply to EIAPL when providing any financial advisory services to an accredited investor (as defined in regulation 36 of the FAR. Persons in Singapore should contact EIAPL in respect of any matter arising from, or in connection with this publication/communication. This report is not suitable for private investors.
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