RETAIL INDUSTRY ANALYSIS

Companies analysed:
Future Retail And Trent Ltd.

GROUP DETAILS:
1.) Yash Banthia 31
2.) Umang Makkar 28
3.) Utsav Ronnie Datta 29
4.) Rishabh Maurya 22
5.) Kalpana Rani
6.) Aswani Singh -

Introduction
Indian Retail Industry
Contributes over 12% of countrys GDP
Mainly owned by small shops but now even big companies entered
the industry (modern retailing)
Currently in expansion mode, only 7% of the retail industry
Provides employment to 40 million people (3.3 % of population)

Future Group

Tata Trent

362 stores in 93 cities

8.5 million sq ft operational retail
space
Turnover 122926 cr ruppes
Future Group includes
o Big Bazaar
o Food Bazaar
o KBs Fairprice
o Pantaloons(earlier)

59 Westside malls, 13 hypermarkets

in 42 major Indian cities
Turnover 13298 cr rupees
Trent include
o Westside (a fashion retail chain)
o Landmark (a bookstore chain)

YoY GROWTH ANALYSIS

FUTURE RETAIL LTD.

TRENT LTD.

Debt and Shareholder Funds

Debt and Shareholder Funds

70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

100%
80%
60%
40%
20%

0%
2009-10

2010-11

2011-12

Total Shareholders Funds

2012-13

2009-10

2013-14

2010-11

2012-13

Total Shareholders Funds

Total Debt

Assets Trend

2013-14

Total Debt

Assets Trend

35.00%

60%

2011-12

30.00%

50%

25.00%

40%

20.00%

30%

15.00%

20%

10.00%

10%

5.00%
0.00%

0%

2009-10

2010-11

Fixed Assets

2011-12
Inventories

2012-13

2013-14

Working Capital

2009-10
Fixed Assets

2010-11

2011-12
Inventories

2012-13

2013-14

Working Capital

PROFITABILITY AND INTEREST ANALYSIS

FUTURE RETAIL LTD.
140000

TRENT LTD.
16%

14%

10%

11%

14%
12%

14%

120000
100000

14000

12%
10%
9%

12%

12000
10000

10%

8%

10%

80000

8000

8%

8%
60000
40000

6%
5%

6%

20000
0

6%

4%

4000

4%

2%

2000

0%
2009-10

Sales

2010-11

2011-12

Operating Profit

2012-13

2013-14

Interest

8%

6000

6%

5%
4%

12%

11%

2%

2%

2%

1%

2009-10

2010-11

2011-12

2012-13

2%
1%

0%

Sales

Operating Profit

2013-14

Interest

PROFITABILITY RATIOS
RETURN ON CAPITAL EMPLOYED
14
12
10
8
6
4
2
0
FY10

FY11

Trent

WRITE YOUR ANALYSIS HERE

FY12

Future

FY13

Industry

FY14

PROFITABILITY RATIOS (Contd.)

EARNINGS PER SHARE (EPS)
9

8.57

7.75

7.28

6
5

3.798

4.046
3.508

3.38

3.026
3.306

2
1
0
2009-10

2010-11

2011-12

Fortune

2012-13

0.02
2013-14

Trent

EPS for Trent retail is less as compared to Future retail Ltd.

EPS for Future retail fell drastically in the year 2013-14 because its net profit margin fell from
2800 million to 28 million due to high interest expenses.

SOLVENCY RATIOS
INTEREST COVERAGE RATIO
6
5
4
3
2
1
0
FY10

FY11

FY12

Trent

WRITE YOUR ANALYSIS HERE

Future

FY13

Industry

FY14

SOLVENCY RATIOS (Contd.)

DEBT EQUITY RATIO
Company

2009-10

2010-11

2011-12

2012-13

2013-14

Future Capital

1.22

0.84

0.61

0.89

1.49

Trent

0.33

0.31

0.21

0.16

0.16

Industry Average

0.95

0.71

0.7

0.64

0.68

LONG TERM DEBT EQUITY RATIO

Company

2009-10

2010-11

2011-12

2012-13

2013-14

Future Capital

0.82

0.62

0.43

0.65

1.04

Trent

0.27

0.23

0.18

0.16

0.16

Industry Average

0.57

0.4

0.68

0.63

0.66

LIQUIDITY RATIO
CURRENT RATIO
3.5
3
2.5
2
1.5
1
0.5
0
FY09

FY10

FY11

Trent

WRITE YOUR ANALYSIS HERE

FY12

Future

Industry

FY13

FY14

EFFICIENCY RATIO
INVENTORY RATIO
160.00

6.00

140.00

5.00

120.00
4.00

100.00
80.00

3.00

60.00

2.00

40.00
1.00

20.00
0.00

0.00
2009-10

2010-11

2011-12

2012-13

Future Retail Ltd. Inventory Days

Trent Ltd. Inventory Days

Future Retail Ltd. Inventory Turnover

Trent Ltd. Inventory Turnover

WRITE YOUR ANALYSIS HERE

2013-14

VALUATION RATIOS
2009-10

2010-11

2011-12

2012-13

2013-14

Future Capital

42.07

48.34

90.72

33.18

30.75

Trent

42.25

48.03

57.42

56.7

67.7

Future Capital

2.59

3.33

2.45

1.79

0.58

Trent

2.54

1.83

1.93

2.16

2.59

Future Capital

0.6

0.8

0.9

1.1

0.6

Trent

6.5

7.5

6.5

Price Earning (P/E)

Price to Book Value (

P/BV)

Dividend Per Share

WRITE YOUR ANALYSIS HERE

CASH FLOW RATIO

Future
Cash Flow From Operating Activities
Net Profit
Cash Paid for Interest

2009-10
-1725.8
1429.6
3244.4

2010-11
2512.4
1351.4
3010.4

2011-12
-14535
803.5
1736.6

2012-13
34185.9
464
4604.1

2013-14
22340.4
276.4
6925.4

Trent
Cash Flow From Operating Activities
Net Profit
Cash Paid for Interest

2009-10
-353.2
209.9
43.2

2010-11
252.9
313.4
95.1

2011-12
-122.9
375.4
122.9

2012-13
-526.8
397.1
132.8

2013-14
-79.9
268.8
153.8

Company

Particulars

2009-10

2010-11

2011-12

2012-13

2013-14

Future
Trent

Cash Flow to net profit ratio

-1.21
-1.68

1.86
0.81

-18.09
-0.33

73.68
-1.33

80.83
-0.30

Future
Trent

Cash times Interest Earned

-0.53
-8.18

0.83
2.66

-8.37
-1.00

7.43
-3.97

3.23
-0.52

Cash Flow to Net Profit Ratio:

Sundry debts in case of Future is high compared to Trent.
Huge Jump in Sales of Future
Investments is higher in case of Future but they have taken a huge loan in 2014.
Cash Times Interest Earned:
This ratio improves in last 2 years for Future.
Lower ratio of Trent indicates lower sales and bad collection

DuPont Analysis
DuPont Analysis
Future
NI/EBT - Tax Burden
Trent
Future
EBT/EBIT - Interest
Burden
Trent
Future
EBIT/Sales - EBIT
margin
Trent
Future
Sales/Assets - Asset
turnover
Trent
Future
Assets/Shareholders
equity - Leverage
Trent
Future
ROE (%age)
Trent

2009-10
2010-11
2011-12
2012-13 2013-14
65.00%
85.00%
66.00%
23.00% 105.00%
83.00%
74.00% 125.00%
79.00%
94.00%
40.00%
35.00%
40.00%
23.00%
3.00%
80.00%
81.00%
71.00%
79.00%
65.00%
8.00%
7.00%
7.00%
8.00%
6.00%
8.00%
9.00%
5.00%
7.00%
3.00%
146.00% 137.00%
94.00% 123.00% 149.00%
69.00%
61.00%
55.00%
55.00%
75.00%
2.22
1.84
1.65
1.96
2.51
1.34
1.39
1.32
1.24
1.24
6.74%
5.25%
2.87%
1.02%
0.71%
4.91%
4.57%
3.22%
2.98%
1.71%

Very Low ROE What are the possible factors?

EBIT Margins Is it a good indicator of a retail companys performance?
Asset Turnover Which company scores better here?
Leverage What does it indicate for these 2 companies?
Final Conclusion Trent or Future?