Bloomberg News

Pantaloon Declines After Saying Board to Discuss Fund Raising

September 30, 2011

Sept. 30 (Bloomberg) -- Pantaloon Retail India Ltd., India’s largest listed store owner, fell to its lowest level in more than two years in Mumbai trading after the company said yesterday its board will meet to discuss raising funds.

The retailer fell 4.1 percent to 197.50 rupees at the 3:30 p.m. close in Mumbai, the lowest since April 2009. The benchmark BSE India Sensitive index declined 1.5 percent.

Pantaloon’s board will consider options including a rights offer, preferential stock or sale of shares to select large investors in a meeting Oct. 3, it said in a statement yesterday after close of trading. Some investors may be concerned about an earnings dilution, according to Jagannadham Thunuguntla, chief strategist at New Delhi-based SMC Wealth Management Services.

“There may be dilution fears, depending on the terms and conditions of the funding,” said Thunuguntla.

The stock completed its biggest monthly loss in more than a decade on concern slowing economic growth, an inflation rate that has remained above the central bank’s comfort zone and higher interest rates will damp consumer demand. Pantaloon shares dropped 33 percent this month, the most since March 2001.

“Retail same-store sales are slowing” for all chain operators, said Hemant B. Patel, an analyst at Enam Securities Pvt. in Mumbai. Pantaloon’s “inventory position, which has been increasing over the last four quarters, needs to get under control.”

Pantaloon’s founder Kishore Biyani said on Sept. 21 the company plans to open as many as 30 Big Bazaar supermarkets annually and add 9 million square feet of retail space in the next four years. The Mumbai-based company sells apparel, food, electronics and home furnishings through more than 1,000 stores in India, according to the company’s website.

--Editors: Subramaniam Sharma, Suresh Seshadri.

To contact the reporter on this story: Malavika Sharma in New Delhi at msharma52@bloomberg.net.

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net.


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