Check Before You Invest : Future Retail Ltd

BSE: 540064 NSE: FRETAIL ISIN: INE752P01024

| Sector: Retail | Industry: Retailing

Snapshot

Q.1 Which industry/sub-sector does Future Retail Ltd belong to?

Future Retail Ltd belongs to the Retail sector, operating specifically within the Retailing segment.

Q.2 Is Future Retail Ltd a good quality company?

Future Retail Ltd is a weak quality company, based on a inconsistent 10-year financial track record.

Q.3 Is Future Retail Ltd undervalued or overvalued?

Future Retail Ltd appears Overvalued, as its key valuation ratios are above with their past averages.

Q.4 Is Future Retail Ltd a good buy now?

Future Retail Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Revenue growth of Future Retail Ltd?

Future Retail Ltd revenue growth is -68.9% for FY-2021, which is below its 5-year CAGR of -1.77%, indicating slower growth.

Q.2 Return on capital employed (ROCE) of Future Retail Ltd?

Future Retail Ltd Return on capital employed is -13.24% for FY-2021, which is below its 5-year historical median of 11.18%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 14%, indicating value preservation.

Q.3 Return on Asset of Future Retail Ltd?

Future Retail Ltd Return on Asset is -15.83%, which is below its 5-year historical median of 0.21%, indicating deteriorated asset utilization efficiency.

Q.4 Return on Equity (ROE) of Future Retail Ltd?

Future Retail Ltd Return on equity is -136.16% for FY-2021, which is below its 5-year historical median of 0.92%, indicating the business is making worse use of its shareholders capital.

Q.5 Cash conversion cycle of Future Retail Ltd?

Future Retail Ltd Cash conversion cycle is -1 days, below its 5-year historical median of 8 days, indicating improved working capital management. However, you need to compare this with its peers in the industry.

	Current Level	5-year Historic Median
Asset Turnover	0.34	2.36
ROE	-136.16	0.92
ROCE	-13.24	11.18
Cash Conversion Cycle	-1 days	8 days

Q.6 Gross Profit margin of Future Retail Ltd?

Future Retail Ltd Gross profit margin which is the profit after deduction of direct costs, is -26.9% for FY-2021, which is below its 5-year median of 3.3%, indicating decreasing margins.

Q.7 Operating Profit Margin of Future Retail Ltd?

Future Retail Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is -8.5% for FY-2021, which is below its 5-year median of 4.9% indicating decreasing margins.

Q.8 Net Profit Margin of Future Retail Ltd?

Future Retail Ltd Net Profit Margin is -50.79% for FY-2021, is below with its 5-year median of 0.17%, indicating decreasing margins.

	Current Level	5-year Historic Median
Gross Profit Margin	-26.9	3.3
Operating Profit Margin	-8.5	4.9
Net Profit Margin	-50.79	0.17

Q.9 Debt to Equity ratio of Future Retail Ltd?

Future Retail Ltd Debt-to-Equity ratio is 9.58, which is above with the industry average of 0.41, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of Future Retail Ltd?

Future Retail Ltd Debt to cash flow from operations is -72, which is at a unhealthy level.

Ownership & governance

Q.1 Promoter shareholding and pledge status of Future Retail Ltd?

Promoters hold 14.31% of the Future Retail Ltd, with 31.14% of their stake pledged, indicating high pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 Revenue growth of Future Retail Ltd vs industry peers?

Future Retail Ltd revenue CAGR is -1.77%, compared to the industry median CAGR of 14.61%, indicating slower growth and losing its market share.

Profit Metrics

	Current Level	5-year Industry Median
Revenue Growth	-68.9	14.6
Gross Profit Growth	-270.4	NAN
Operating Profit Growth	-126.3	NAN
Net Profit Growth	-9,452.9	14.3

Operating Efficiency

	Current Level	5-year Industry Median
Asset Turnover	0.34	1.14
ROE	-136.16	7.96
ROCE	-13.24	12.62
Cash Conversion Cycle (days)	-0.7	48

Valuation & price assessment

Q.1 Stock return of Future Retail Ltd over the last decade?

Over the last 5 year(s), the stock has delivered a CAGR of -44.75% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	-	-44.8%	-9.6%	-

Q.3 Valuation ratios of Future Retail Ltd vs historical?

The current P/E is similar that its historical median.

Q.4 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	-	-	37.16
Price to Book	-	-0.09	2.93
Price to Sales	0.02	0.02	1.30
EV to EBITDA	-9.76	-9.76	14.03

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