Kishore Biyani's Future Retail sees high trade volumes amid Amazon buzz

With a just week of trading left this month, retailer's turnover crosses Rs 610 mn

Optimistic of a big payday, investors and traders have been steadily increasing trades in Future Retail shares as the Kishore Biyani-led company continues its talks with Amazon to sell close to 15 per cent stake to the online marketplace major for around $600 to $700 million. 

Future Retail has signed a term-sheet with Amazon, and the two are negotiating the deal. If things go as planned, Amazon would close the deal by January, sources said. 

“In the past few months, interest in Future Retail’s shares vis-à-vis shares of other similar companies has increased. Buyers are certain that the Amazon deal to buy a stake in the firm will happen soon,” said a share market analyst. If things go as planned, sources said, Amazon would close the deal by January. 

Amazon, which just closed a deal along with private equity firm Samara Capital to acquire Aditya Birla Retail’s food and grocery retail chain, More, for Rs 42 billion, has been on an overdrive to increase not only its offline retail footprint, but also the reach of grocery service, an area it believes would be its key growth driver. 

Trading interest in the shares of Kishore Biyani-promoted Future Retail has seen a few spikes in the current financial year, indicating a rise in number of investors. The first spike, according to BSE, was visible in May. The total turnover of the company’s shares rose to Rs 600 million in May with trading of more than a million shares. The average turnover for the January-April period was just Rs 340 million. The average shares traded in the January-April period was 600,000. 

The interest was sustained in June when 0.8 million shares were traded. After a hiatus in July, the investors again showed an interest in the stock in August, and September looks set to be the best month of the year as far as interest in Future Retail is concerned. 

With a week of trading left in the month, the turnover has crossed Rs 610 million and over a million shares have been traded. The high interest can be seen even though the share price has remained volatile this month. It hit a monthly high of Rs 587 in the first week, and has been on a declining trend to close at Rs 520 on Friday. 

Even with this decline, the performance of Future Retail has been better compared to peers. Take the case of Shoppers Stop that saw its stocks slip over 14 per cent from its monthly peak of Rs 662 in the first week to Rs 567 on Friday.

Incidentally in the US, reports said Morgan Stanley — bullish on Amazon’s offline grocery plans — is advising on buying more shares of the firm. Amazon, by 2021, plans to open as many as 3,000 cashier-less stores called Amazon Go.    

 Sources added that Future did not want the entire stake sale done for cash and was eyeing some shares of Amazon India, which has a valuation of around $16 billion.

 Talks between the two firms started in January, soon after the news of Walmart planning to buy a stake in Flipkart started doing the rounds. Future Retail, a listed firm, has a market cap of over Rs 260 billion.
 

What’s in store    2,000-plus Total no. of stores in India

Layout for next 15 months
 

• 1,000 Small format stores (Easyday, Nilgiris, and other brands)
• 40 Big Bazaar stores
• 60 Brand Factory stores
• 50-plus Stores for food, fashion, electronics, other FMCG brands