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Shoppers Stop
D e p a r tm e n t a l s t o r e s g o i n g s t r o n g , H y p e r C i t y t o
c a t c h u p…
Shoppers Stop Ltd’s (SSL) Q1FY12 results were a mixed bag. While
revenues and space addition were in line with our estimates, the
operating and bottomline performance disappointed the Street. SSL
reported a topline of | 593.3 crore (I-direct estimate: | 606.5 crore) up
66.7% YoY backed by space addition of 0.28 million sq ft (I-direct
estimate: 0.21 million sq ft) and inclusion of HyperCity’s numbers.
However, incremental expenses due to store additions, operating loss of
HyperCity (| 12.9 crore) and increased raw material costs weighed on the
operating efficiency. The company reported a consolidated EBITDA
margin of 2.3% in Q1FY12 vs. 7.1% in Q1FY11. Higher interest and
depreciation outgo further weighed on the bottomline leading to a loss of
| 1.5 crore during the quarter. During Q1FY12, SSL added 16 of the 24
stores planned in FY12E. While the management has guided that space
addition will be in line with the target, it may take longer to achieve
breakeven of the new HyperCity stores added.
ƒ Highlights of the quarter
In Q1FY12, SSL added 0.28 million sq ft taking its total retail area to
3.6 million sq ft. During Q1FY12, SSL added three departmental, five
Crossword, one Home Stop, six MAC and one HyperCity store. Due
to multiple factors like price hikes, raw material inflation (YoY),
Indian Premier League falling fully during the quarter (last season it
was divided over Q4FY10 and Q1FY11) SSL witnessed a muted like
to like (LTL) sales growth of 7% (lower than 21% in Q1FY11).
V a l u a t i o n
While we continue to remain positive on the future prospects of the
company considering robust space addition, turnaround of HyperCity and
improvement in operating margin due to changed business model, we
believe the recent run up in the stock discounts the same. At the CMP,
SSL is trading at 50.0x FY12E EPS of | 8.3 and 30.3x FY13E EPS of | 13.7.
We have valued the stock at 0.8x EV/sales (on FY13E sales of | 3,833
crore) and it is currently trading at an EV/sales multiple of 1.1x and 0.9x
FY12E and FY13E sales, respectively. We have a HOLD rating on SSL.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Shoppers Stop
D e p a r tm e n t a l s t o r e s g o i n g s t r o n g , H y p e r C i t y t o
c a t c h u p…
Shoppers Stop Ltd’s (SSL) Q1FY12 results were a mixed bag. While
revenues and space addition were in line with our estimates, the
operating and bottomline performance disappointed the Street. SSL
reported a topline of | 593.3 crore (I-direct estimate: | 606.5 crore) up
66.7% YoY backed by space addition of 0.28 million sq ft (I-direct
estimate: 0.21 million sq ft) and inclusion of HyperCity’s numbers.
However, incremental expenses due to store additions, operating loss of
HyperCity (| 12.9 crore) and increased raw material costs weighed on the
operating efficiency. The company reported a consolidated EBITDA
margin of 2.3% in Q1FY12 vs. 7.1% in Q1FY11. Higher interest and
depreciation outgo further weighed on the bottomline leading to a loss of
| 1.5 crore during the quarter. During Q1FY12, SSL added 16 of the 24
stores planned in FY12E. While the management has guided that space
addition will be in line with the target, it may take longer to achieve
breakeven of the new HyperCity stores added.
ƒ Highlights of the quarter
In Q1FY12, SSL added 0.28 million sq ft taking its total retail area to
3.6 million sq ft. During Q1FY12, SSL added three departmental, five
Crossword, one Home Stop, six MAC and one HyperCity store. Due
to multiple factors like price hikes, raw material inflation (YoY),
Indian Premier League falling fully during the quarter (last season it
was divided over Q4FY10 and Q1FY11) SSL witnessed a muted like
to like (LTL) sales growth of 7% (lower than 21% in Q1FY11).
V a l u a t i o n
While we continue to remain positive on the future prospects of the
company considering robust space addition, turnaround of HyperCity and
improvement in operating margin due to changed business model, we
believe the recent run up in the stock discounts the same. At the CMP,
SSL is trading at 50.0x FY12E EPS of | 8.3 and 30.3x FY13E EPS of | 13.7.
We have valued the stock at 0.8x EV/sales (on FY13E sales of | 3,833
crore) and it is currently trading at an EV/sales multiple of 1.1x and 0.9x
FY12E and FY13E sales, respectively. We have a HOLD rating on SSL.
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