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Last Updated : Feb 14, 2020 12:23 PM IST | Source: Moneycontrol.com

Future Retail shares inch up despite weak Q3; brokerages see the firm moving in right direction

The Kishore Biyani-led company reported a 16.72 percent decline in consolidated net profit at Rs 164.56 crore for the third quarter ended December.

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Shares of Future Retail inched up by a percent in intraday trade on BSE on February 14, a day after the company released a subdued set of numbers for the December quarter of the financial year 2020.

The Kishore Biyani-led company reported a 16.72 percent decline in consolidated net profit at Rs 164.56 crore for the third quarter ended December.

The company had reported a net profit of Rs 197.60 crore in October-December quarter a year ago, Future Retail said in a regulatory filing.


Total income fell 3.07 percent to Rs 5,208.89 crore during the quarter under review from Rs 5,374.12 crore in the corresponding quarter last year.

Total expenses were 2.58 percent lower at Rs 5,042.46 crore as compared with Rs 5,176.52 crore a year ago.

Future Retail has a network of 1,500 stores in over 400 cities. Its hypermarket and supermarket business is led by Big Bazaar, Big Bazaar GEN NXT, HyperCity, Foodhall, fbb, Food Bazaar, Easyday Club and Heritage Fresh.

Global wealth management firm Morgan Stanley has an 'overweight' rating on Future Retail, with a target price of Rs 540.

Morgan Stanley said Future Retail's Q3 earnings missed its estimates due to weak topline, however, focus on cost efficiencies and cashflows a step in the right direction.

Domestic brokerage firm Motilal Oswal Financial Services has a buy call on the stock with a target price of Rs 450.

As per the brokerage, Future Retail is on track to shut loss-making stores and improve efficiencies, which is expected to result in cost savings of Rs 160-200 crore. This, coupled with Rs 150-200 crore savings from the Future Enterprises asset purchase, should garner incremental PBT of over Rs 300 crore, Motilal Oswal said.

"We build PBT of Rs 820 crore in FY21E against Rs 710 crore in FY20E. We roll forward our estimates to FY22 and expect a moderate pace of large-format store addition (25 annually) and SSSG of 6/9 percent for FY21/22. Subsequently, we expect revenue/EBITDA/PAT CAGR of 6 percent/13 percent/5 percent, respectively, over FY19-22," Motilal said.

Shares of Future Retail traded 0.77 percent up at Rs 380 on BSE around 12:15 hours. If the stock ends in the green, it will be its eighth consecutive days of gains.

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First Published on Feb 14, 2020 12:23 pm