Future Retail witnessed profit booking after a day of surge on Wednesday. The stock had surged over 5 percent before correcting. The stock is currently trading a percent lower, a recovery from 3.5 percent lower movement earlier in the day.
HSBC also has maintained an upbeat stance on the stock and hiked the target to Rs 730 from Rs 590. This implies an upside of 23 percent.
The brokerage said that the firm had unveiled aggressive growth strategy and digital future and with disciplined execution, Future Retail could unlock a virtuous value creation journey.
For the firm, scale is key competitive advantage and Future can improve its cost economics as it accelerates revenue growth, it said, adding that it expects earnings CAGR of 30% over FY18-20 driven by operating leverage and store rollout.
The company plans to launch a new digital model it calls Retail 3.0 which will blend technology with brick and mortar retail. The new avatar will be called Tathastu. These retail stores will enable online shopping for consumers.
“It is a model called Tathastu . This will help you get anything you want at our Easyday (department) stores,” said Kishore Biyani Founder and CEO, Future Group.
The company aims to open 10,000 such stores by 2022. Initially, the company will start off with 1,100 stores in FY18, Biyani said.
“The new digital world is something which we want to be a part of. We will be taking the help of Google Inc to look at property sourcing only through technology. We want to be trillion dollar consumer business in India by 2047,” Biyani said.
Giving a few statistics, Biyani said 98 percent of retail in India takes place in physical stores.
Future Group will be opening retail stores every 2 km which will offer discounts to those living in that radius, where consumers can become a member of the store.
Biyani added that each brick and mortar store would have 2,000 members.
At 14:42 hrs Future Retail was quoting at Rs 581.15, up Rs 7.40, or 1.29 percent, on the BSE. It touched a 52-week high of Rs 606.00.
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