The record date for determining the entitlement of Equity Shares of Future
Lifestyle Fashions Limited (FLFL) to Shareholders of Future Retail is 24th June
2013. The exchange ratio has been fixed at 1:3 i.e. one equity share of FLFL shall
be issued and allotted for every 3 equity shares of Future Retail. The theoretical
impact of the demerger would be Rs 48/ share (based on swap ratio). Shares of
Future Retail purchased hereon would not receive any entitlement in FLFL and
hence we adjust target price downwardsfor the same. FRL isleft with the value
format biz i.e. (Big bazaar, Food bazaar etc.). We value the business at 8x
EV/EBITDA which translate into Rs 127/share.
With this de‐merger now FRL becomes largely a play on Hypermarket retailing
with some presence in Home and Electronics. As this a partial de‐merger (75%)
FRL continuesto hold 20% stake in FLFL.
We adjust our target price to Rs60 for this de‐merger and maintain our BUY
recommendation.
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Lifestyle Fashions Limited (FLFL) to Shareholders of Future Retail is 24th June
2013. The exchange ratio has been fixed at 1:3 i.e. one equity share of FLFL shall
be issued and allotted for every 3 equity shares of Future Retail. The theoretical
impact of the demerger would be Rs 48/ share (based on swap ratio). Shares of
Future Retail purchased hereon would not receive any entitlement in FLFL and
hence we adjust target price downwardsfor the same. FRL isleft with the value
format biz i.e. (Big bazaar, Food bazaar etc.). We value the business at 8x
EV/EBITDA which translate into Rs 127/share.
With this de‐merger now FRL becomes largely a play on Hypermarket retailing
with some presence in Home and Electronics. As this a partial de‐merger (75%)
FRL continuesto hold 20% stake in FLFL.
We adjust our target price to Rs60 for this de‐merger and maintain our BUY
recommendation.
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