MOSL: FUTURE LIFESTYLE FASHIONS (Buy)-Consistent results-not captured fully in valuation
FUTURE LIFESTYLE FASHIONS: Consistent results; not captured fully in valuation
(FLFL IN, Mkt Cap USD1.4b, CMP INR487, TP INR585, 20% Upside, Buy)
- FLF showcased robust 4QFY19 performance with strong revenue/EBITDA growth. Revenue grew 29% YoY to INR13.8b (5% beat), driven by 8.6% overall SSSG, healthy footprint additions and growth in FLF’s brands. EBITDA grew 28% YoY to INR1.2b (9% beat) due to strong revenue growth. But, margins were flat YoY at 8.9%, as drop in gross margins (attributed to growth in the low margin Brand Factory (BF) format) were offset by operating leverage benefits. PAT at INR560m was up 166% YoY; however, adjusting for reversal of excess tax provision of ~INR350m, PAT stood flat YoY on high depreciation and low other income. FY19 revenue/EBITDA/PAT grew 27%/27%/50% YoY.
- BF driving growth: BF’s revenue share zoomed to ~35% (v/s ~27% YoY); while revenue jumped 61% YoY to INR4.8b due to healthy 13.1% SSSG (13.7% YoY, est. at 11.1%) and four store additions (est. at nine stores). Central’s revenue too grew at a healthy 14% YoY to INR7.2b backed by 6.5% SSSG (1% YoY); revenue share dropped to ~52% (v/s ~59% YoY).
Future Lifestyle Fashions Ltd is an India-based integrated fashion company. The Company's portfolio consists of fashion brands that cover the entire gamut of sub-categories including formal menswear, casual wear, active or sportswear, women's ethnic wear, women's denim wear, women's casual wear, footwear and accessories. The Company primarily operates through its retail outlet destinations: Central, which is a large-format stores that offers over 500 domestic and international branded apparel and accessories across several categories; and Brand Factory, which operates as a chain of fashion discount stores. Merchandise available at Brand Factory stores include men's formals, casuals, youth wear, women's western wear, women's ethnic, sportswear, infant wear, accessories, footwear, luggage and operates over 41 stores across 20 cities in India. Its offered brand includes Lee Cooper, Indigo Nation, Bare Casuals, Scullers, John Miller, Converse, Umbro, SPUNK and URBAN Yoga.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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