"We have been informed by Kishore Biyani on behalf of the existing shareholders forming part of the promoter group and Future Coupons Limited (promoters) that they have entered into a share subscription agreement and a shareholders’ agreement with Amazon.com NV Investment Holdings LLC (Amazon),"
Other group stocks were trading flat in the trade. For instance, Future Enterprises was trading at Rs 25.70, up just 0.39 per cent while Future Lifestyle was ruling at Rs 427.80 apiece, up 0.04 per cent.
Analysts at Edelweiss Securities find the company's pact with Amazon as a prudent move in the current retail ecosystem. The Amazon pact will help the company set up an omni-channel business model, restructure board to up corporate governance standards, and reduce related-party transactions, they wrote in a note dated August 23.
However, they cautioned that risks may emanate from regulatory changes which is likely to derail deal contours. "We maintain ‘BUY/SP’ with the target price (TP) of Rs 498 (maintain 21x, 1 year forward EV/EBITDA; while scope for re-rating remains, we will closely monitor execution of joint business development plan and progress on the same)," they wrote.
At CMP, the stock is trading at 16.6x FY21E adjusted for INDAS 116 EV/EBITDA (9.0x FY21 unadjusted EV/EBITDA).
On a year-to-date (YTD) basis, shares of all Future Group stocks have underperformed the market. While Future Enterprises and Future Retail have lost 33 per cent and 18 per cent, respectively, those of Future Lifestyle has gained 0.67 per cent during the period. The benchmark S&P BSE Sensex, on the other hand, has gained over 1 per cent.