India’s largest-listed retailer Pantaloon Retail India Ltd increased its revenues 78.5% to Rs1,176.27 crore and reported an 87% increase in net profit to Rs29.67 crore for the three months to September from the year-ago period, surprising analysts. The quarter is the first in Pantaloon’s current financial year, which ends in June.

Pantaloon Retail MD Kishore Biyani

Girish Solanki, retail analyst at Angel Trading, said he had expected revenue growth to be as it was, but profits to be around 20%. The analysts said they could not immediately explain the unexpected jump.

Profit before income tax excluding extraordinary income also increased 126.6% to Rs96.34 crore.

With large players such as Reliance Industries Ltd, the Aditya Birla Group and Wal-Mart Stores Inc. entering India’s booming retail sector, Pantaloon has been adding new stores rapidly and seen employee costs rising. This, along with rising interest costs, had dented margins in previous quarters.

“We are working on increasing our margins," Kishore Biyani, Pantaloon’s managing director, said. “We have upped ticket sizes, particularly in the food and fashion segment. The promotions we did in August also helped." Ticket sizes in the retail industry refer to average billing per customer.

Employee costs continued climbing steeply; it went up 41% to Rs64.18 crore for the quarter from Rs45.44 crore in the year-ago period. Biyani said the company was working to cut employee costs and increase productivity.

Interest costs ballooned to Rs35.16 crore in the quarter from Rs11.57 crore in the same quarter last year.

The Pantaloon results were announced after the markets closed for the day, but shares of the retailer closed at Rs607.7 each, up Rs30.90 or 5.36% from the previous close, on the Bombay Stock Exchange. The exchange’s benchmark index , Sensex, rose 2.52%.

Pantaloon’s umbrella entity the Future Group has filed its prospectus for an initial public offering of shares in its financial arm, Future Capital Holdings. It has also announced a float for a newly set up company, Future Ventures Ltd.