The brokerage house expects Future Retail to contribute over 90 percent of FY20 revenues against 74 percent in FY17.
Future Consumer share price rallied as much as 15 percent on Friday after leading global Brokerage House Morgan Stanley has initiated coverage with an overweight rating on the stock.
The research house has set a target price for the stock at Rs 95 per share, implying a potential upside of 61 percent as it expects Future Consumer to be India’s fifth-largest FMCG company by FY21.
“Future Group’s retail ecosystem yields a unique competitive advantage. Future Consumer can launch innovative products with a disruptive go-to-market strategy,” Morgan Stanley said.
The Brokerage House Expects Future Retail to contribute over 90 percent of FY20 revenues against 74 percent in FY17.
Revenues are expected to jump 3.2 times over FY17-20 and margin by 470 bps by FY20, it said.
Scale-driven efficiencies, better fixed-cost absorption and product mix improvement will drive margin expansion, it feels.
Morgan Stanley’s bull case target price is Rs 194 per share (230 percent upside over Thursday’s closing price), citing likely faster ramp-up of small format stores by Future Consumer and higher contribution of brands.
Future Group’s Future Consumer (formerly known as Future Consumer Enterprise) is a first sourcing-to-supermarket food company.
At 12:31 hours IST, the stock price was quoting at Rs 65.45, up Rs 6.80, or 11.59 percent on the BSE.