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Last Updated : Feb 12, 2019 03:47 PM IST | Source: Moneycontrol.com

Buy Future Retail; target of Rs 576: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Future Retail has recommended buy rating on the stock with a target price of Rs 576 in its research report dated February 04, 2019.

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Prabhudas Lilladher's research report on Future Retail


We cut FY19 EPS estimates by 13% and that of FY20 and FY21 by 3-3.5% factoring in higher interest burden and lower other income. 3Q results are encouraging with 1) Big Bazaar SSG at 10.1% (14th quarter of almost double digit SSG), 2) Hypercity turning EBIDTA positive at 3.6% (-6.7% in 2Q) and 51% Easyday stores achieving positive EBIDTA. FRL aims to use the current equity infusion (Rs20bn, received from sale of stake in Future Generali, Sketchers and FLFL) and upside from stake sale by Bharti and Heritage (~Rs10.5bn, Rs5.25bn already received) to acquire store infrastructure from FEL over next 18 months. While this will abolish the lease rentals (3.7% of sales) by FY21 and incraese EPS by 10%, we estimate it to impact ROE by 100-150bps.


Outlook


We estimate 18.3% PAT CAGR (33.8% PBT CAGR) over FY18-21 and value the stock at Rs595 based on 30xDec20EPS (Earlier Rs.604 on 30xSeptFY20 EPS, due to higehr tax rate in FY21). Maintain BUY.


For all recommendations report, click here


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First Published on Feb 12, 2019 03:47 pm
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