Edelweiss’ research report on Future Lifestyle Fashions
Future Lifestyle Fashions (FLF) is an integrated play on brands (30 owned,licensed and investee) and retail presence (>5.4mn sq ft). This integrated model had ensured strong SSSG (16.4% in FY17) and outperformance. We expect ~12% SSSG to sustain over the next 2 years driven by: 1) scale up of retail channels across segments – Central in premium and Brand Factory in value; 2) right mix of brands – owned (~38.3% of revenues) and third‐party; 3) Power brands, which would fuel growth; and 4) better inventory management. Ergo, we expect sales and EBITDA CAGR of 20.3% and 24.2%, respectively, over FY17‐19E with RoE imroving to 11.0% in FY19E from 2.8%. We initiate coverage with a ‘BUY’ and TP of INR416.
We assign target multiple of 15x FY19E EV/EBITDA and arrive at TP of INR416. Initiate coverage with ‘BUY/SO’.
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