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Motilal Oswal Report
Shoppers Stop Ltd.'s Ebitda declined 4% YoY to Rs 1.6 billion in Q2 FY24, mainly due to a 4% (calc.) drop in like-for-like and a margin contraction of 100 basis points YoY.
The margin decline was attributed to soft demand, the delayed festive season and a weak performance of private Labels, partly offset by double digit growth in the beauty segment.
Shoppers Stop has guided for mid-single digit same-store sales growth, led by health LFL in the ongoing festive period. It is seeing steady improvements in the recently launched value retail format, InTune, and is planning aggressive 164 store additions over FY24-26.
We expect a 15%/19% compound annual growth rate in revenue/Ebitda over FY23-25 and its ability to sustain high growth could drive valuation. We retain our 'Neutral' rating with a target price of Rs 735.
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