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Motilal Oswal Report
Shoppers Stop Ltd. reported a moderate 2% YoY Ebitda growth (in line) to Rs 2.2 billion in Q3 FY24, as the 7% YoY revenue growth was offset by gross margin contraction of 120 basis points YoY. The margin decline was attributed to weak demand despite the festive season and continued muted performance within private labels.
Management has indicated that the softness in demand is likely to persist for another quarter and anticipates a reversal in FY25. This, along with steady store additions, particularly in the recently launched value retail format 'Intune', and growth in the beauty segment, could drive growth in the coming period.
We expect a 9%/11% compound annual growth rate in revenue/Ebitda over FY23-25.
We value Shoppers Stop at 10 times FY26E enterprise value/Ebitda to arrive at our target price of Rs 695. Reiterate 'Neutral'.
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