Jefferies
Shoppers Stop (Buy)
CMP: ₹570.75
Target: ₹660
Shoppers Stop is a holding company. The company is engaged in the business of retailing a range of household and consumer products through departmental stores. It operates through approximately 80 such departmental stores located in approximately 40 cities. Its products include apparels and non-apparels.
Post its clean-up exercise in FY18, Shoppers Stop is a turnaround contender, with increased focus on the base department stores business, reduced leverage, better return ratios and the omni-channel playout.
With the stage set, execution remains the key as competition from fast fashion players increases. With Hyper City out, we build in 5 per cent sales CAGR over FY18-20E; however, we expect EBITDA and PAT CAGR of 29 per cent and 87 per cent, respectively, for FY18- 20E. With a new core heavy Shoppers Stop, we initiate coverage with a Buy and price target of ₹660.