Thursday 8 October 2015

Future Retail Ltd: New Deal with Baba Ramdev's Patanjali

For old postings about Future Retail Click Here and Here

Future retail has inked a deal with Baba Ramdev’s Patanjali for selling their products in the retail chains of entire Future group. Just pasting the news from Moneycontrol.com:

Kishore Biyani's Future Group is all set to announce a tie-up with Baba Ramdev’s Patanjali. The former will get exclusively right to see the latter’s products in Future outlets like Nilgiris, Food Bazaar, Food Hall and Big Bazaar. Fast moving consumer goods (FMCG) major Patanjali is no small fish in the market.

The company has surpassed listed companies like Proctor and Gamble, Emami  and Jyothy Labs  in terms of annual revenue. With revenue of Rs 2,500 crore, its valuation goes up to a whopping Rs 14,000 crore. Patanjali Group is targeting revenues of about Rs 5,000-10,000 crore in the next few years. It also plans to launch new products including instant noodles, malted food and oral care.

Sources say that Future Retail  is also eyeing close to Rs 1,500 crore revenue from this deal and is expected to expands its customer base by one crore people. One interesting fact about Patanjali is that though all its products have Baba Ramdev’s face on it, the yoga guru does not own any stake in the company.

Baba Ramdev is a prime example of direct/personal branding and I like the way he has created his empire from the scratch. He has interacted with people through his yoga and health awareness for a very long time and thus created a huge feel good factor in the public, people feel themselves attached to brand Ramdev…they take it as their brand because so many of them have directly communicated with the creator; Baba Ramdev.

So I think this deal is a big one for future group. Although my positivity for Future Retail comes from the fact that they have their own in house FMCG production capacity in the form of Future consumer and Future lifestyle fashions; Future retail can sell these products at par with other branded FMCG products in its retail chains with better margins. Also I am waiting for them to enter into online retail with full strength as this is the right time because people have accepted online retail in their routine life. I think we may get something from Biyani for online retail this festive season.

Most of us are having FRL from the levels of 85-90. So just continue to hold it. Fresh investments can be made at this level also but one has to keep enough cash ready for more buying at lower levels in case of any fall

(Views are personal and should not be taken as a recommendation for buying or selling a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing)

10 comments:

  1. Hi Gurpreet , The way 8k miles is moving and has 2000 cr m.cap is anyway justified for 100 cr revenue and sudden jump in profit from less than 10 cr to 20+ cr?

    Thanks
    Sridhar

    ReplyDelete
    Replies
    1. I doubt...although never studied it as it throws away any such attempt. Out of 37 lac public shares, it zoomed from 60 to 1800 with just few thousand shares traded !!! Better to stay MILES away from it.

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  2. Dear GS,

    By any chance are you tracking Pioneer Embroideries.? If so, are you positive on the same.?

    Since i see you catch potential stocks from the very early stage, i hope Pioneer might interest as as a prime Turn Around Candidate.

    Good Day.

    ReplyDelete
    Replies
    1. Dear, never studied the same. But will take a look...

      Delete
  3. Sure GS, thanks a lot. Good day.

    ReplyDelete
  4. Dear GS,

    Do you think it is better to buy future retail DVR shares instead of the regular future retail shares as they are trading at a discount... please advise

    ReplyDelete
    Replies
    1. Also what is your opinion about Future consumer enterprise...

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    2. Dear, I am buying it regularly from 8, then 5 and recently in aug at 14.20. My avg is around 8.50. This may have been advised at this blog in the posts related to Future retail. Recently also, it has been advised it to the readers of this blog via persoanl email. As i was very busy so just could not post a small post on it.
      You can wait for a fall in it for buying. at CMP...decision is yours :)

      Delete
  5. Hi did you have chance to study a company called sanwaria agro which is a upcoming fmcg and has good tie ups with both future n patanjali

    ReplyDelete
    Replies
    1. Hi...It looks doubtful...not credible. Business is not generating any cash at all...all the NP of past years have been blocked in working capital i.e in debtors and inventory. Debt and Int chgs are high.

      Road to retail and FMCG is not easy. Distribution success is the toughest part of the FMCG game...a lot of efforts and investments is required for this for which this one looks highly doubtful.

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