Shoppers Stop extends gain after promoters up stake; surges 45% in 1 month

On Monday, March 21, 2022, four promoter group companies had collectively purchased 74,000 equity shares worth Rs 3 crore of the company from open market

Shares of Shoppers Stop surged 6 per cent and hit a fresh 52-week high of Rs 460 on the BSE in Thursday's intra-day trade. The stock extended its rally into fourth day, having zoomed 14 per cent during the period, after its promoters hiked stake in the company via open market. Moreover, the stock has rallied 27 per cent in the past six trading days. In comparison, the S&P BSE Sensex was down 0.46 per cent at 57,422 points at 01:48 PM.

On Monday, March 21, 2022, Shoppers Stop promoter group companies - Raghukool Estate Developement LLP, Casa Maria Properties LLP, Palm Shelter Estate Development LLP and Capstan Trading LLP – collectively purchased 74,000 equity shares worth Rs 3 crore of the company from open market. The names of the sellers could not be ascertained immediately. CLICK HERE FOR DETAILS

Meanwhile, in the past one month, Shopper Stop has outperformed the market by gaining 45 per cent, as compared to 5.5 per cent rise in the S&P BSE Sensex. In six months, it has zoomed nearly 90 per cent as against 4 per cent decline in the benchmark index. The stock had hit a record high of Rs 654 on September 3, 2018.

For October-December quarter (Q3FY22), Shoppers Stop reported a strong operational performance with earnings before interest, taxes, depreciation, and amortization (ebitda) margins improving 580 bps year-on-year (YoY) to 19.2 per cent.

The company said EBITDA performance was driven by robust demand recovery and tight control on costs, while E-commerce sales continued to grow rapidly, up by 39 per cent. The company is now net debt free again.

In Q3FY22, Shopper’s Stop revenue grew by 35 per cent YoY to Rs 1,070 crore. Healthy demand owing to strong festive and wedding season resulted in the company reaching close to pre-Covid levels in Q3FY22. The company reported profit after tax (PAT) of Rs 50 crore in Q3FY22, as against loss of Rs 21 crore in Q3FY21.

"The company's revenue was adversely impacted in January 2022 due to Covid-19, but recovered strongly and almost reached the pre-Covid levels in February 2022. Further, early trend in March 2022 indicated the revenue scale to surpass the pre-Covid levels", Motilal Oswal Financial Services said in a company update.

Management targets to double revenue over the next 3-4 years backed by its strategy of adding 10-12 per cent new stores annually, its initiative to revive SSSG to high single or double digit on improved new store productivity and focus on private labels, strong growth in the Beauty segment and ecommerce initiatives.

Even if the company achieves 60-70 per cent of its guidance, it could significantly surprise the street expectations. The pace of store additions and SSSG remain the key monitorables, the brokerage firm said. The stock, however, traded above its target price of Rs 400 per share.