Future RETAIL - RESULTS FOR THE QUARTER Q2 FY 2018-19

Future RETAIL

BIG PICTURE OF THE QUARTER

Q2 FY 2018-19

FUTURE RETAIL	Sep '18	Jun '18	Sep '17	YOY	QOQ
Net Sales	4,929	4,539	4,506	9.37	8.59
Purchase of Traded Goods	3,747	3,502	3,5031	6.97	7
Interest	55.39	51.09	49.66	11.54	8.42
Net Profit	175.1	153.12	153.16	14.32	14.35
Equity Share Capital	100.51	100.5	97.96	2.6	0.01
Basic EPS	3.48	3.05	3.13	11.18	14.1
MP	449
PE	32.25575
VOLUME	20 LAKHS
FV	2
52W L H	423	639
PRICE TREND
05.01.19	1 week	2 week	1 mnth	3 month		6 mnth		9 mnth	1 yar
Price	510.35	546.1	525.85	441		558.3		545.8	554.5
Gain / Loss	-11.99%	-17.75%	-14.59%	1.85%		-19.55%		-17.71%	-19%

*Underlying Y-o-Y growth adjusting for eZone rationalization and HomeTown demerger

BALANCE SHEET

PARTICULARS (RS.cr)As at 30 Sep 18 As at 31 Mar 18

Shareholders' Funds  3,433                    3,096

Net Debt                     1,479                   1,103

Total Capital Employed:4,912                 4,199

Less: Investments      68                       0

Net Adjusted Capital Employed  4,845    4,199

Fixed  Assets               1,338                   1,052

Net  Non-Current Assets  236                 236

Net  Current Assets      3,271                  2,912

Total Net Assets  :      4,845                   4,199

   Margin expansion continues with EBITDA expanding by 18% on Y-o-Y basis to reach 5.1%

   Over 13 consecutive quarters of almost double digit SSG at  Big Bazaar .  9.4% in Q2FY19

NETWORK SNAPSHOT

  Present in 373 cities with 1,336 stores

 Over 50 cities with >1 million population have a Big Bazaar store

 In last 12 months, CO has opened 26 large stores in Tier 2/3 towns

 Only company to have 15 stores in hilly regions & the North East

BUSINESS SNAP SHOT

 The festive season moved from 15 th Sep–15 th Oct ‘17  to  05^th Oct  - 05 th Nov ’18: Festive growth has been 18% Y-o-Y

 Improvement by ~20% in footfall conversions

 Continued strong roll-outs of key membership programs like Future Pay & Easyday Savings Club

FRL STORE NETWORK

LARGE FORMAT :

BIG BAZAAR  284 STORES:143 CITIES : 12.4 ML SQ FT

FBB               74                 39                        0.8

FOODHALL    10                 5                          0.1

SMALL FORMAT 959         273                      2.1

EASYDAY CLUB

WH SMITH AADHAAR

OTHERS

EZONE                9            6                          0.1

CUMULATIVE            1336      373                      15.4

·       9 SMALLER FOOD BAZAAR Stores In Hyderabad Were Converted To Heritage Stores; WH.Smith Stores Included

Y-O-Y GROWTH : 877+459 (SEP 17) =1336 (SEP 18)

12.7 MLN SFT +2.7 MLN = 15.4MLN

Large Format Performance:-

                     SSG%    EBITDA% HYPERCITY EBITDA%

Q2 FY 18 =13.8%       6.4%            Q4FY18 -20.2%

Q1 FY 19  = 10.1%     7.9%                          -11.3%

Q2 FY 19  = 9.4% 7.7%                          -6.7%

ON TRACK TO ACHIEVE 5% EBITDA IN UPCOMING QTR

Small Store Membership

: Continues To Strengthen:

·       TOTAL MEMBERS : 8,00,000

·       AVG : 1630 MEMBERS PER STORE (> 1 YEAR)

·       MEMBERS VISIT : >3 TIMES A MONTH

·       ANNUAL SPEND PER MEMBER : >35,000

·       MEMBERSHIP ACTIVE IN 715 STORES

EASY CLUB MEMBERS (IN MLN)

SEP 17 = 0.3 + (>2.5 X GROWTH) =  SEP 18 :0.8 MLN

FUTURE RETAIL :-

·       >7.8 MLN USERS

·       SALE OF RS.6000 CR ON ANNUALISED BASIS

·       32% YoY INCREASE IN TOTAL TRANSACTIONS DURING THE QTR

·       AVG SPEND PER USER OF > RS.700

·       >4 MLN PRICE MATCH TRANSACTIONS

Impact  Assessment

§  Footfalls: 250,000 (40% conversion rate)

§  Revenue: Rs. 50cr at an ATS: Rs. 2,075 and a high GM%

§ Young and sticky customers generated

§ ~600,000 coupons given in H1 FY19

Q2 FY 19 PERFORMANCE SUMMARY

SSSG%

BIG BZR : Q2 FY 18  :13.8%  :  Q1 FY 19 : 10.1%  : Q2 FY 19 : 9.4%

FUTURE RETAIL : 10.2 %    :3.6%   : 5.9%

H1 FY 19 PERFORMANCE SYUMMARY :

·       INCOME : 9211 +9.3% = 9467

·       GROSS MARGIN : 2334 OR 25.3% TO 2,559 OR 27%

·       EBITDA : 4.6% OR 426 TO 5% OR 478

·       *Underlying Y-o-Y growth adjusting for eZone rationalization and HomeTown demerger

·       ROCE : 19.4% ;   

·       ROE    :  20.1%   

·       INVENTORY DAYS(REVENUE) :sep 17 : 79; mar 18 : 87  ; sep 18 : 90

NEW FDI POLICY ON E COMMERCE

Government on December 26 announced several restrictive changes to the FDI policy for online retailers. To check deep discounting and predatory pricing. Government has barred online retailers from entering exclusive deals for selling products on their platforms.

Government has also enforced a 25 percent cap on the inventory that an e-commerce platform can purchase from a single vendor.

The changes will come into effect on February 1, 2019.

BHARTI ENTERPRISES SELLS :

Bharti Enterprises sells Future Retail's shares worth around Rs 300 crore. The shares were bought by Edelweiss group, 

In June, Bharti group entity Cedar Support offloaded 6 percent stake in future retail for Rs 1,697 crore through open market transactions.

Earlier in May 2015, Future Group had acquired Bharti Group's retail business under the EasyDay chain in an all stock deal worth Rs 750 crore to create one of the biggest super market chains. Following the deal Bharti Group's retail business had merged with Future Retail.

AMAZON HOLDING

Kishore Biyani may be widening the scope of a deal with Amazon that will allow the US giant to buy him out in future, reported The Economic Times.

both parties have added an option to the share purchase agreement that allows Amazon to buy out Future Group Retail (FRL) over an extended period of time, possibly about 8-10 years, subject to Indian laws.

Amazon and Future Group are in the final stages of their deal wherein the Jeff Bezos-led company will acquire 9.5 percent stake in FRL as a foreign portfolio investor (FPI).

The official announcement of the deal was expected in December.

Kishore Biyani and his family hold 46.51 percent of the company, of which 40.3 percent is pledged.

"Amazon is betting that with gradual FDI relaxation in food processing and single-brand retail over time, the current freeze will be removed. Meanwhile, a clear realignment involving global players is happening in Indian retail and Biyani would want to capitalise on that," a source said, on condition of anonymity.

The Seattle-headquartered company picked up a 5 percent stake in Shoppers Stop last year and acquired More supermarket chain through Samara Capital earlier this year. It was reported that the retail giant was also in talks with Spencer's Retail.

To break into India's growing retail market, Amazon has been looking to invest in local brick-and-mortar stores.

The report said Amazon may give a 'control' premium of about 25-30 percent for their right to call upon the shares, although sources said the details of the deal are being worked out.

The UPA government had allowed up to 51 percent investment from foreign investors in local stores. This was changed when the BJP government came to power and stopped fresh investment in the retail sector.

Under the current regime, the way to circumvent this rule is through the FPI route. A single FPI can hold up to 10 percent stake in multi-brand retail companies.

Not just retail, the two companies are partnering in fashion and fast moving consumer goods. There are plans to merge both their payment options—Amazon Pay and Future Pay—to create a bigger entity.

Amazon will be exposed to more than 80 consumer product brands Future Group owns in FMCG, food, fashion and footwear, after this deal. The US retail giant can leverage the strong retail network — over 2,000 stores in 355 cities.