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H i t b y h i g h e r t h a n n o rma l s p a c e a d d i t i o n…
Shoppers Stop’s (SSL) Q3FY12 numbers were below our estimates on all
fronts due to (a) weak consumer sentiment and (b) higher than normal
space addition, which led to increased operating expenses. SSL’s Q3FY12
sales increased by 14.7% YoY to | 730.8 crore (I-direct estimate: | 890.9
crore) while space addition of 0.3 million sq ft was ahead of our estimate
of 0.2 million sq ft. The revenue per sq ft for the departmental segment
came in lower than our expectations. SSL’s retail operations are now
spread over a total area of 4.2 million sq ft across 23 cities in the country.
For the departmental stores, the company reported a revenue per sq ft of
| 1,936 (Q3FY11 - | 2,276) as against our estimate of | 2,294. For
HyperCity, the company reported a revenue per sq ft of
| 1,793 in Q3FY12 as against | 1,844 in Q3FY11. The operating margin
dipped by 198 bps YoY to 4.7% (I-direct estimate: 5.1%) on account of
higher operating costs due to aggressive space additions. Consequently,
PAT dipped by 43.6% YoY to | 9.3 crore. During 9MFY12, sales increased
by 28.5% YoY to | 2,142.2 crore. However, EBITDA and PAT decreased
by 17.3% and 49.1% to | 83.5 crore and | 18.0 crore, respectively.
ƒ Robust space addition plans remain intact
The management is confident of going ahead with their space
addition plans and is planning to increase the count of the
departmental stores from the current 49 to 66 over the next two
years. It also plans to add two HyperCity stores each year and is
aiming at profitable growth in this format. On the funding side, SSL
looks comfortably placed with a debt/equity ratio of < 1.0x. On a
standalone basis, the debt/equity currently ratio stands at 0.4x and
the management intends to maintain this going forward.
V a l u a t i o n
The Q3FY12 performance has been weak for retailers at large. Barring
October, sales growth remained flat with a negative bias. While there is
pain in the short term, the management is hopeful of a revival in demand
from H2FY13E. At the CMP, the stock is trading at 38.5x FY13E EPS of |
9.0 and 0.8x EV/FY13E sales. We continue to maintain a HOLD rating on
Shoppers Stop with a target price of | 361.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
H i t b y h i g h e r t h a n n o rma l s p a c e a d d i t i o n…
Shoppers Stop’s (SSL) Q3FY12 numbers were below our estimates on all
fronts due to (a) weak consumer sentiment and (b) higher than normal
space addition, which led to increased operating expenses. SSL’s Q3FY12
sales increased by 14.7% YoY to | 730.8 crore (I-direct estimate: | 890.9
crore) while space addition of 0.3 million sq ft was ahead of our estimate
of 0.2 million sq ft. The revenue per sq ft for the departmental segment
came in lower than our expectations. SSL’s retail operations are now
spread over a total area of 4.2 million sq ft across 23 cities in the country.
For the departmental stores, the company reported a revenue per sq ft of
| 1,936 (Q3FY11 - | 2,276) as against our estimate of | 2,294. For
HyperCity, the company reported a revenue per sq ft of
| 1,793 in Q3FY12 as against | 1,844 in Q3FY11. The operating margin
dipped by 198 bps YoY to 4.7% (I-direct estimate: 5.1%) on account of
higher operating costs due to aggressive space additions. Consequently,
PAT dipped by 43.6% YoY to | 9.3 crore. During 9MFY12, sales increased
by 28.5% YoY to | 2,142.2 crore. However, EBITDA and PAT decreased
by 17.3% and 49.1% to | 83.5 crore and | 18.0 crore, respectively.
ƒ Robust space addition plans remain intact
The management is confident of going ahead with their space
addition plans and is planning to increase the count of the
departmental stores from the current 49 to 66 over the next two
years. It also plans to add two HyperCity stores each year and is
aiming at profitable growth in this format. On the funding side, SSL
looks comfortably placed with a debt/equity ratio of < 1.0x. On a
standalone basis, the debt/equity currently ratio stands at 0.4x and
the management intends to maintain this going forward.
V a l u a t i o n
The Q3FY12 performance has been weak for retailers at large. Barring
October, sales growth remained flat with a negative bias. While there is
pain in the short term, the management is hopeful of a revival in demand
from H2FY13E. At the CMP, the stock is trading at 38.5x FY13E EPS of |
9.0 and 0.8x EV/FY13E sales. We continue to maintain a HOLD rating on
Shoppers Stop with a target price of | 361.
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