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INVESTMENT INSIGHTS

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 -1.8% , indicating slower growth.
Q.2 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.3 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.4 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 Historic Median
Gross Profit Margin -26.9 3.3
Operating Profit Margin -8.5 4.9
Net Profit Margin -50.79 0.17
Q.5 Return on Asset of Future Retail Ltd?
Future Retail Ltd Return on Asset is -15.83(x), which is below its 5 year historical median of 0.21(x), indicating deteriorated asset utilization efficiency.
Q.6 Return on Equity (ROE) of Future Retail Ltd?
Future Retail Ltd Return on equity is -136.16% for FY-2021 , which is below its historical median of 0.92%, indicating the business is making worse use of its shareholders capital.
Q.7 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 estimated weighted average cost of capital(WACC) 14%, indicating value preservation.
Q.8 Cash conversion cycle of Future Retail Ltd?
Future Retail Ltd Cash conversion cycle is -1 , below its historical median of 8 , indicating improved working capital management. However, you need to compare this with its peers in the industry.
Current Level Historic Median
Asset Turnover 0.34 2.36
ROE -136.16 0.92
ROCE -13.24 11.18
Cash Conversion Cycle -1 8
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 0.29 , 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, indicating the business is not able to service its debt comfortably.

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 0.00% , indicating slower growth and losing its market share.
Profit Metrics
Current Level Industry Median
Revenue 6,261 248.2
Gross Profit -1,684.2 5.5
Operating Profit -541 5.6
Net Profit -3,180 1.6
Operating Efficiency
Current Level Industry Median
Asset Turnover 0.34 1.12
ROE -136.16 4.14
ROCE -13.24 12.58
Cash Conversion Cycle -0.7 39

Valuation & price assessment

Q.1 Stock return of Future Retail Ltd over the last decade?
Over the last 9 years, the stock has delivered a CAGR of 0% based on the current price.
Q.2 What return has the stock given over the last decade?
9Y 5Y 3Y 1Y
Share Price - -45% -5.2% -
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 measure up against the historic numbers and the current industry numbers?
Valuation Ratios Current Historic Median Industry Median
Price to Earnings - 0.00 69.86
Price to Book - 1.23 3.21
Price to Sales 0.02 0.31 1.29
EV to EBITDA -9.76 17.63 13.01

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