PANTLOON Retail Buy Target : 194

PANTLOON Retail Buy Target : 194

Ø Pantaloon, with a consolidated footprint of over 15.6m sq ft, is the largest organised retailer in India, more than three times its nearest rival, Reliance Retail. Pantaloon has restructured its business to make it ready for FDI. The company’s biggest format, Big Bazaar, which forms over 65% of revenue, has been shifted to a step-down subsidiary, Future Value Retail. Pantaloon Retail (India) is India’s leading retail chain and part of Indian conglomerate Future Group. It has a network of more than 1000 stores across 63 cities in India.

Ø Recently Government of India (GoI) had suspended its proposal to allow 51% FDI in multi-brand retail which was a big setback for the industry. Pantaloon Retail is most susceptible due to which counter witnessed heavy selling in past last couple of months.

Ø Analyzing the Derivative data the open interest is up by 16% around 1.mln shares since expiry, total open interest in the name stands at 7.9 mln shares which is almost near to peak of 8.5 mln shares.

Ø Given a bullish pattern on candlestick charts the stock after consolidating for a long time have moved past 50DMA giving a positive break out on the falling Trend Line. This bullish pattern has come with good delivery volumes indicating major selling being absorbed in the name. Point to note is that there is also a Postive divergence on the RSI oscillator indicating that counter can be in a uptrend in near term upto 195 levels.

Ø The stock is up by 28% from start of this expiry considering the amount of short built in the counter on back of negative news flow in the whole retail sector. We feel that the major concerns are overdone as of now pantaloon is very much under owned stock.

Ø We Suggest going LONG on Pantaloon Retail at cmp 165. With Target of 194.