Future Consumer LtdQ3 FY16

Future Consumer Ltd Q3 FY16 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹0.22Market Cap: ₹44 CrSector: Retailing

Management growth scorecard

Revenue

Category 2

Margin

N/A

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 3 growth signals are positive.

Full analysis

Revenue guidance

Category 2
  • Future Consumer aims to become a premier FMCG goods company with significant sales growth.
  • Recorded a 40% top line growth over the previous year, with 16% sequential growth from Q2 to Q3 FY16.
  • Brands business growth is at 46%, constituting ~76% of total company revenue.
  • Expect gradual margin improvement, targeting around 20-27% in the longer term depending on product mix.
  • Focus on building value-added product lines like oats, wafer biscuits, and value-added dairy to enhance margins.
  • Expansion plans include opening 37-38 hypermarkets, 200-300 small stores, and distributing through 5000 PDS stores in Rajasthan by June.
  • Plans for wider distribution covering 7000-8000 pin codes, focusing on semi-urban rather than rural markets.
  • Increase in product launches and new brand introductions expected to drive revenue growth.
  • Reorganization to focus on FMCG and distribution, relinquishing capital-intensive retail operations via franchising to improve profitability.

See what Future Consumer Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

Yes
  • Future Consumer Enterprise Ltd. has announced a fund raise of approximately US$55 million, consisting of:
  • - US$10 million from promoters.
  • - US$45 million from the investor Black River (a fund spun off from Cargill).
  • Promoters have already paid an initial 25% of the warrant application money.
  • The Investment Agreement with Black River was executed on January 25, 2016.
  • The company is awaiting regulatory approvals to proceed with the issuance of equity to Black River.
  • No explicit mention of any new debt-based fundraising during the call.
  • The focus seems to be on equity infusion to support growth and brand building.

See what Future Consumer Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes
  • The Food Park is a key capital investment focus, with multiple manufacturing units being developed and operational by June-July 2016, including rice mill, flour mill, dips, ketchup and sauces plant, frozen lines, pulping lines, and wafer biscuit factory.
  • Leasing more than 15-20 acres to around four parties, with more than five additional factories coming up, aiming for 40 manufacturing plants operating by year-end.
  • Investment in an oats factory in Sri Lanka that started trial production.
  • Building dairy capacities near Mumbai and in the East for short shelf-life products.
  • Expansion of hypermarkets (37-38 openings planned) and 200-300 new small stores.
  • Strategic distribution expansions: 5000 stores via Rajasthan PDS model and distribution established in Gujarat and Punjab.
  • Recent fund raise includes US$ 55 million (US$ 10 million from promoters and US$ 45 million from Black River) aimed at financing expansion.

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