Mumbai: Indian retail firms are expected to see healthy earnings growth in July-Sept on an uptick in the economy that boosted purchasing power and in turn their same-store sales.
Riding high on buoyant sentiment, the companies expanded their footprint, which is also expected to reflect in the profit numbers.
A Reuters poll of brokerages expects Pantaloon Retail, the country’s largest listed retailer, to report a 29% rise in net profit on a sales growth of 32%.
Watch and jewellery retailer Titan’s profit is seen jumping 41% and sales 34% .
“We expect double-digit same-store sales growth to continue and that will support a healthy rise in revenues and margin expansion on a year-on-year basis,” said an analyst with brokerage Edelweiss.
Same-store sales, which is sales at stores that have been in existance for over a year, are a key indicator of growth for retailers.
Pantaloon Retail is expected to benefit from increased offtake from the monsoon and pre-Independence Day discounts which resulted in same-store sales growth of 30-40%, analysts said.
“Pantaloon’s presence across price points and categories helps the company to be in a better position than all its peers. A double-digit same-store sales growth and further space addition will lead to healthy growth in revenues,” said Viraj Nadkarni, an analyst with Angel Broking.
“We expect it to lead with a 43% top-line growth.”
However, numbers of Pantaloon Retail are not strictly comparable with year-ago figures due to the spin-off of its value retail business under Future Value Retail in September and the merger of the Home Retail segment with itself, in February.
K Raheja group-owned Shoppers Stop is also expected to post a steady growth on the back of a pick-up in lifestyle retailing.
“Shoppers Stop’s performance is expected to continue to improve in the coming quarters on the back of a pick-up in consumer demand for lifestyle retailing and profit growth will be strong due to consolidation with Hypercity,” brokerage Edelweiss said in a note.
For Titan, an analyst with Motilal Oswal expects watch and jewellery volumes to boost sales by 20%.
“There is likely to be a slight dip in margins as premium watches sell more during the Diwali season which will be factored in quarter three this time,” he added.
Going ahead, contribution from lifestyle retail is seen rising significantly.
“While we expect value retail to strengthen further, we expect lifestyle retail to extend its growth trajectory as upbeat consumer sentiment should translate into higher demand for lifestyle goods,” said Angel Broking’s Nadkarni.