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Shares of apparel and accessories retailer Future Lifestyle Fashions Ltd climbed as much as 6.7 per cent to Rs 451.50. Brokerage CLSA has initiated coverage with “buy” rating and a price target of Rs 535.
CLSA says it expects 22 per cent EBITDA CAGR in FY18-21, driven by robust network addition, particularly in “Brand Factory” outlets, and operating leverage benefits.
Brand Factory, a discounting platform for old and stagnant inventory, does not face competition from offline players. CLSA adds stake sale in “investee” brands, such as Celio in which the company has invested, could create value.
The brokerage expects adjusted debt-equity to fall below 0.7x and reported net debt to equity to reduce further to 0.4x by FY20.
Future Lifestyle stock had risen 22.4 per cent this year as of Monday's close after gaining nearly 170 per cent last year. All seven brokerages covering the stock rate it “buy” or higher; their median price target is Rs 482.50, according to Thomson Reuters Eikon.
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