Phani Sekhar of Angel Broking told CNBC-TV18, "Investors should book the losses in Future Retail for the simple reason that although the company has actually achieved remarkable progress in reduction of debt but the very business model of the company will entail huge capex in the subsequent years in order to maintain its market share. This is simply because there is huge potential out there to be tapped."
"When you have these kinds of demand on your businesses and even the most mature businesses in this line will not earn more than 18 percent return on equity. Here you have a company which is already trading at 1.5 times sales which translates to roughly about 30 P/E and about 4.5 times price to book which from no valuation perspective makes sense. So from time to time based on news flow the stock can keep getting excited but from a longer term investor’s point of view this is a sheer case of value destruction," he added.
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