Buy Future Consumer; target of Rs 69: Motilal Oswal

Motilal Oswal's research report on Future Consumer

Future Consumer's (FCL) reported net sales grew 26.9% YoY to INR8.4b (est. of INR9.4b) in 1QFY19. EBITDA increased 133.4% YoY to INR201m (est. of INR255m). The company reported a loss of INR61m (est. of a profit of INR74m), which narrowed from a loss of INR102m in 1QFY18. Segmental performance: Centre of Plate portfolio grew by just 19% in 1QFY19. Deflationary environment in Pulses portfolio is expected to have impacted realization. Fruits & Vegetables portfolio grew by 67% YoY, Processed foods portfolio grew by 33% YoY, and Home & personal care portfolio grew by 40% YoY.

Outlook

This results in a target price of INR69, implying ~48% upside from current levels. Maintain Buy. As soon as the company demonstrates profitability at the net level, we will move our valuation on a P/E basis.