Shoppers Stop Q2 Results Review - Soft Revenue Growth Takes A Toll On Profitability: Motilal Oswal

Motilal Oswal Report

Shoppers Stop Ltd. reported an 8% YoY decline in Ebitda (12% miss) due to weak same-store sales growth and gross margin contraction. Revenue was up 4% YoY as store additions and the robust 11% YoY growth in the Beauty segment was offset by an overall SSSG decline and a 15% YoY decline in private brands revenue.

The management indicated that like-for-like growth recovered in Sep (+9% YoY) and remains optimistic on demand recovery in H2 FY25 on account of the higher number of weddings and recovery in discretionary spends. 

Shoppers Stop has aggressive store expansion plans for Intune (value fashion) and is focused on growing its Beauty business. We expect a CAGR of 11%/14% in Shoppers Stop’s revenue/Ebitda over FY24-27.

We lower our FY25-26 revenue by 2%/7% and Ebitda by 5%/11% on weaker performance in H1 FY25.

We value Shoppers Stop at 12 times Dec’26E enterprise value/Ebitda to arrive at our target price of Rs 750. Reiterate Neutral.

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