Shoppers Stop Ltd. share price target

During the year, the company transitioned to Ind-AS 116, which led accounting to shift from operating lease model (off-balance sheet) to finance lease model (on balance sheet). Operating lease expenses will now be replaced by depreciation and interest expenses. The overall effect is likely to be higher EBITDA and lower PBT in initial year (higher PBT in later years) but no major impact on cash flows. The company has recognised a right of use asset worth | 1146 crore and lease liability of | 1940 crore. The net difference is to be adjusted in the opening reserves as on April 1, 2019 and...

Store addition pace of departmental stores decelerates in FY19 After registering healthy SSSG in the previous quarter (8.9%), momentum decelerated in Q4FY19, with SSL reporting 3.7% SSSG in Q4FY19 (I-direct estimate: 3.0%, Q4FY18: (-) 4.1%). On the store addition front, the company added one departmental store and two beauty format stores in Q4FY19. For SSL, the beauty segment (~16% of revenues), has been growing at a swift pace (9% growth in FY19). The management believes there is immense opportunity to scale up this segment, especially in non-metro cities. The...

2 May 2019 declined 7% YoY to INR7.9b (5% miss), with the impact of the GST and the new accounting standard on revenue recognition (Ind-AS 115) coming into play. However, adjusted for the aforesaid factors, revenue was up 4.7% YoY. For FY20, SHOP expects (1) mid- to high-single-digit LTL growth, (2) low-double-digit revenue growth and (3) 40-50bp/80-100bp gross/EBITDA margin expansion. Slower pace of mall openings and geographical/economical limitations for a large-scale branded apparel store restricted SHOPs ability to add new stores (as evident in FY19), impacting its revenue growth. Nevertheless, we expect some pick-up in the pace of new store adds over the coming years 4/15 new store adds for Shoppers Stop/Beauty format in FY20/21 (v/s net adds of 0/12 in FY19). Despite modest revenue growth, the increasing thrust on private labels and cost- efficiency measures should drive margins expansion of 100bp over FY19-21.

ICICI Securities Ltd | Retail Equity Research Revenues for the quarter grew 3.7% YoY to | 999.1 crore. Adjusting for changes on account of GST and Ind-As-115, revenue growth would have been 9.9% YoY. Growth was mainly driven by healthy SSSG of 8.9% YoY (highest in the last five quarters) owing to strong festive season and low base of Q3FY18 Gross margin for the quarter rose ~260 bps YoY due to higher share of private label brands (up 150 bps YoY, 10 bps QoQ to 10.4%)....

ICICI Securities Ltd | Retail Equity Research Revenues for the quarter grew 3.2% YoY to | 864.5 crore (I-direct estimate of | 903.5 crore). The soft revenue growth was on account of a shift in the festive season in Q3FY19. According to the management, revenue growth would have been 7.4% YoY if adjusted for Ind-As 115 and GST impact. Average bill size was up 6.7% YoY to | 3001 while ASP increased 3.6% YoY to | 1169 Gross margins for the quarter improved 147 bps YoY to 41.1%....

ICICI Securities Ltd | Retail Equity Research For Q1FY19, revenues declined 12% YoY to | 826.6 crore, albeit on a high base of Q1FY18. Due to adjustment of Ind-As 115 and implementation of GST, adjusted growth according to the management should have been flattish. For Q1FY19, footfalls for the departmental store declined 8% YoY to 100.92 lakh customers. However, the conversion ratio improved 120 bps YoY to 27.9% Gross margins for the quarter improved 475 bps YoY to 41.0%....

Shoppers Stop Ltd. (SSL) a part of K Raheja Group, is a pioneer in modern retailing in India. The company along with its subsidiary Crossword Bookstores Ltd. operates around 170 stores (including 84 Shoppers Stop stores and 89 Crossword stores) with more than 4.35mn sq. ft. in 38 cities. SSL unending pursuit to benchmark themselves with the best in the world is...

ICICI Securities Ltd | Retail Equity Research SSL's standalone revenues declined 7% YoY to | 850 crore (I-direct estimate of | 943 crore). Ongoing renovations in key stores and lower number of discounting days (preponement of EOSS in Q3FY18) impacted footfalls for the current quarter. For Q4FY18,...

Owing to challenges from reduced MRP, re-positioning of private labels and mall renovations, the company couldn't meet its FY18E SSG guidance. Re-jigging the private labels, improved in-store experience and digital programmes should help drive footfalls and SSG in FY19E (SSG guidance of 7.5%) We have reduced our revenue estimates for FY19/20E by 3.5% each and increase our EBITDA margins by 10bps each on account of better cost control. Reduction in debt is likely to boost our EPS estimates by 7%/0.4% for FY19/20E. We maintain our HOLD rating...

Comparable standalone sales grew 2% with 1.4% same-store-sales growth. Gross margin was down 180 bps on decline in private label share (down 260 bps to 8.9%) and an early End of Season Sale (advanced by 7 days). OPM improved 150 bps on operational efficiencies.