Reality check: Future Retail - Under a cloud

The stock of Future Retail has fallen over 20 per cent in the last couple of weeks. The retail major’s shares corrected steeply, as markets viewed the government’s e-commerce policy clarifications negatively.

In the last week of December, the Centre clarified that e-tailers cannot allow sale of products from companies in which they have stakes. Also, one single vendor cannot sell more than 25 per cent of total goods in an e-commerce portal.

While the Future group’s founder and CEO, Kishore Biyani, has welcomed the government’s clarifications, the markets haven’t jumped in to buy, and the selling pressure continues in the stock.

There have been indications that a deal involving Amazon buying a 10 per cent stake in the Future group for around ₹2,000 crore, may fall through. Valuations have corrected significantly, but any rally would depend on the group’s plan of action and how the policy cloud clears.

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