India rising consumer spend to steer retail cos Q2 growth

(Reuters) - 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 percent rise in net profit on a sales growth of 32 percent.

Watch and jewellery retailer Titan’s profit is seen jumping 41 percent and sales 34 percent.

“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 percent, 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 percent top-line growth.”

Indian government to exceed revenue target

KOLKATA/MUMBAI: Despite partial withdrawal of stimulus , the economy is in the pink of health.

Revenue secretary Sunil Mitra stated that going by the buoyancy in tax collection, total revenue collection in current fiscal year would exceed the government’s budgetary target.

“We expect to exceed the revenue target modestly in this fiscal,” he said. Mitra pointed out that the high growth in revenue collection is triggered by exceptional growth on indirect tax front, led by customs duty.



“The robust growth in collection is continuing even in October,” he added.

It may be noted that the revenue collection generally gathers steam in the second half of the financial year. Mitra is hopeful that the targeted fiscal deficit of 5.5% for 2010-11 can be met with ease. “We are returning to the path of fiscal consolidation. The targeted fiscal deficit will be met. Besides tax, there will be huge additional revenue from 3G auctions and disinvestment,’’ Mitra said. “As of now, collection is encouraging in both these fronts,” he added.



According to Mitra, indirect tax collection in the first half has witnessed a massive 44% growth till October. The growth in direct tax front was 20%.