Future Consumer share price fell to its fresh 52-week low today after brokerage Morgan Stanley downgraded the stock to 'equal weight' from 'overweight' and cut its target to Rs 28 from Rs 82 per share. Future Consumer share price lost up to 8.52% intra day to Rs 23.60 compared to the previous close of Rs 25.80 on BSE.
The stock closed 1.94% lower at Rs 25.30 on BSE. Future Consumer share has fallen 17.46% in last seven days. The small cap share has lost 45% since the beginning of this year and declined 36% during the last one year.
Morgan Stanley said although the firm was progressing well with strong consumer acceptance for brands and improving profitability, elevated working capital forced it to re-evaluate the valuation benchmark.
The brokerage that sustained current high capital employed would impact Future Consumer (FCL's) near-term earnings growth and, more importantly, innovation capability. It further said that the big 73 percent and 38 percent cuts in FY20 and FY21 EPS estimates (off a low base) reflect lower revenue growth, weaker absorption of fixed costs and higher interest costs.
Future Consumer, formerly Future Consumer Enterprise, is a holding company. It is a food company, which is engaged in branding, marketing, sourcing, manufacturing and distribution of fast moving consumer goods, food and processed food products. It has also commenced its operations for marketing and distribution of oats and oats-based cereal products in India through its subsidiary company at Sri Lanka.
By Aseem Thapliyal