Shares of Future Retail Ltd (FRL) have risen 52% so far this month. One reason for this optimism is that reports suggest Reliance Industries Ltd is one among the suitors for assets held by the Future Group, including stakes in FRL and Future Lifestyle Fashions Ltd.
Note that RIL is India’s largest physical retailer, as on 30 March, with 28.7 million sq. ft of operating area, which includes Jio stores. RIL’s large offline presence will get a further boost if the reported deals with Future Group go through. At the end of the December quarter, FRL operated 16.1 million sq. ft of retail space, while Future Lifestyle had 7.5 million sq. ft.
BofA Securities analysts said in a note to clients that if the reported deals fructify, margins are likely to improve due to improving scale.
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