Shoppers Stop to raise Rs 300 cr via rights, issue open Nov 27-Dec 11

Existing investors holding 70 shares can apply for 17 new shares at Rs 140 apiece

Large-format retail chain, Shoppers Stop, plans to raise Rs 300 crore via a rights offering. 

The K Raheja Corp-promoted company joins retail sector peers Aditya Birla Fashion and Retail (ABFRL) and Arvind Fashions in raising capital from existing shareholders in the wake of the covid-19 pandemic, which upended the retailing business. 

ABFRL and Arvind had raised Rs 995 crore and Rs 400 crore, respectively in July this year. 

Shoppers Stop’s right issue will remain open for subscription between November 27 and December 11. Existing shareholders holding 70 shares will be eligible to apply for 17 new shares in the rights issue at Rs 140 apiece. 

Shares of Shoppers Stop gained 2.58 per cent to end at Rs 186.90 per share on the BSE. The rights issue price is 25 per cent below Friday’s close, which analysts say would encourage existing investors to participate. 

The promoter holding in Shoppers Stop is currently at 63.9 per cent. 

Many companies have raised fresh capital this year to pare their debt or to repair the damage caused to the business by the covid-19 pandemic. The retail sector especially has been severely hit with many physical stores permanently shutting due to challenges around pay rentals and staff salaries. Offline retailers like Shoppers Stop are beefing up their online presence aiming to tap into the high-growth opportunity.

“Online fashion has a $6 billion market size, which should grow to $19 billion by FY24 with a 57 per cent share from apparel and the remaining from footwear and accessories. While offline fashion should see 12 per cent CAGR, online fashion would see 32 per cent,”said Phillip Capital in a note on October 26.