Bullish on Pantaloon: Saurabh Mukherjea, Ambit Capital

Saurabh Mukherjea, Head of Equities, Ambit Capital, in a chat with ET Now, gives his views on Educomp


What would be your approach to retail stocks?

Retail on balance we think retail FDI will go through, money will come into the country. Pantaloon remains the most obvious beneficiary. With the rest of the names out there whilst I am sure they will do deals with foreigners, those deals will take longer to sign. There is more work to be done there and the rollout will take longer because the infrastructure on the ground is yet to be built out. In Pantaloon’s case it has already made it’s built out. The question is valuations. At what valuations will they be able to strike a deal? Is it one-time sales? There is a range of valuations at which the deal could be done. Depending on the valuation, the upside could be as low as 20% from this point in or as high as 50-60% from this point and that’s really the question there. There is clearly a range of logistical difficulties that the sector perhaps still have to be dealt with and on which there is very little clarity from the government. We are trying to understand the situation better by talking to the government, talking to industry executives as to how the practical challenges of FDI will be dealt with. Unfortunately that is still something, which will get in the way of upside coming quickly on retail stocks. If you do want to benefit from holding Pantaloon, you need to be patient. I do not think there will be a big one week blast up in the stock.