Thursday 6 September 2012
India retail sector to grow at 12% CAGR next 5 yrs
Investment bank CLSA expects the retail sector in India will grow at a compounded annual rate of 12% over the next five years, with hypermarkets and fast food outlets growing faster than the overall market.
"The low penetration level of the organised channel leaves significant headroom for growth. In particular, we expect hypermarkets and fast food formats to sustain five year revenue CAGRs of 19-22%," said CLSA analyst Jaibir Sethi.
Growth in per capita GDP (gross domestic product) will cause the proportion of middle class population to rise from sub 6% to 13.7% over 2010-2016 and drive a growth in disposable income, he said.
CLSA has an "outperform" rating on Jubilant Foodworks, which operates Domino's Pizza and Dunkin Donuts' chains in India, given the strong growth in the sector.
"We like Jubilant Foods, given its strong brand, scalable model and capital efficiency. We see it as a strong play on medium term growth in Indian fast food," Sethi said.
"The low penetration level of the organised channel leaves significant headroom for growth. In particular, we expect hypermarkets and fast food formats to sustain five year revenue CAGRs of 19-22%," said CLSA analyst Jaibir Sethi.
Growth in per capita GDP (gross domestic product) will cause the proportion of middle class population to rise from sub 6% to 13.7% over 2010-2016 and drive a growth in disposable income, he said.
CLSA has an "outperform" rating on Jubilant Foodworks, which operates Domino's Pizza and Dunkin Donuts' chains in India, given the strong growth in the sector.
"We like Jubilant Foods, given its strong brand, scalable model and capital efficiency. We see it as a strong play on medium term growth in Indian fast food," Sethi said.
