Investors can consider booking profit on a part of their holdings in Pantaloon Retail. The retail frontrunner would have to sustain the 45-50 per cent growth, which it has logged in the last couple of years, over the next five years to justify its current market capitalisation.
The current valuations do not appear to factor in the higher risks that have emerged with a new competitive scenario. Pantaloon is expanding at a tremendous pace. While it has already signed up much of its planned retail space, execution risks remain. (See lead story on Retailing for details).
While there may not be scope for much upside in the near term, there could be positive surprises in the form of new alliances or acquisitions. Investors may consider re-entering the stock in the event of steep declines linked to market weakness.