Noted fund manager Porinju Veliyath who turned bullish on Future group, and in particular, Future Consumer, says the share rally in group stocks is just the start.
More than a year ago, Kishore Biyani’s Future Group had reached the point of almost being written off by analysts – saddled by debt, losses and struggling operations.
But shares of group firms such as Future Consumer, Future Retail and Future Enterprises, have been on a tear since the start of the year, with prices more than doubling in many cases.
A noted fund manager who turned bullish on the group, and in particular, Future Consumer, says this is just the start.
Last week, Porinju Veliyath, MD and portfolio manager, Equity intelligence India, told CNBC-TV18 that the organized retail sector was at an inflection point when he started buying shares in the firm and that it is now staring at years of high growth ahead.
Veliyath’s Kochi-based Equity Intelligence runs a PMS fund that is billed amongst the best performing over the last decade. It started buying shares of Future Consumer at a price of Rs 10 a few years back, from where it has grown nearly three times. (The fund holds 12 percent of its corpus in the scrip.)
But he told CNBC-TV18 that the Future Group’s revenue target of Rs 1 lakh crore for the next few years was “quite achievable”.
This means that the group’s key firms, Future Retail -- which operates, among others, Big Bazaar -- and Future Consumer – which manufactures many products for Big Bazaar – have great sales growth potential.
Future Consumer, whose revenues were around Rs 3,000 crore last year, has outlined a target of around Rs 21,000 crore, Veliyath told ET in March this year.
With mom-and-pop stores taking a hit from demonetisation, organised players such as Future Retail were able to cash in on the opportunity and were successful in expanding their consumer base.
During the cash ban Big Bazaar allowed customers to withdraw Rs 2,000 using their debit cards from their outlets and the government’s push on a cashless economy is likely to play in favour of organised players due the availability of better infrastructure compared to smaller shops.
Veliyath has often said on Twitter that demonetization was a landmark decision, which will benefit organized companies in a big way.
In the CNBC-TV18 interview, he also talked about the upcoming D’Mart IPO, and said that the stock may be overvalued at the indicative price and said he would prefer Future Retail to it.