Aditya Birla Money neutral on Shoppers Stop; target Rs 344

3964 Investors following Shoppers Stop. Share this News with them.

0

Like this story, share it with millions of investors on M3

Aditya Birla Money neutral on Shoppers Stop; target Rs 344

Aditya Birla Money has come out with its report on Shoppers Stop with a neutral rating and target of Rs 344 in its report dated November 25, 2011.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Reduce Jubilant Foodworks; target Rs 709: GEPL Capital Buy Exide Industries; target Rs 137: BP Equities Buy Bajaj Auto; target of Rs 2200: Emkay ALSO READ See previous views by Aditya Birla Money See what other Experts & Brokerages are saying about Shoppers Stop See messages about Shoppers Stop Shoppers Stop BSE | NSE 31/05/12 Are Mutual Funds betting on Shoppers Stop?

Aditya Birla Money has come out with its report on Shoppers Stop with a neutral rating and target of Rs 344 in its report dated November 25, 2011.

"Shoppers Stop (SSL) owns 51% stake in Hypercity. Hypercity is in nascent stage of growth and owns 9 stores as of FY11, with only 3 stores older than 2 yrs. We expect Hypercity to open 20 stores by FY15E and 42 stores by FY20E. Since, Hypercity has not yet break even at EBITDA level and its balance sheet being relatively weak as compared to that of SSL standalone, SSL is currently funding its expansion needs in the form of loans and advances (As of FY11, total loans and advances to subsidiary companies is Rs 1541.7 mn out of which around Rs 1256.6 mn has been given to Hypercity). As of FY11, the total gross debt of standalone SSL stood at Rs 1487.2 mn, indicating substantial chunk of debt is to fund the expansion of subsidiaries companies."

"With allowance of 51% FDI in multi-brand retail, Hypercity can bring in strategic partner, there reducing dependence on SSL to fund its expansion plans. Hence, standalone SSL will get benefit in the form of a) release of funds from Hypercity, which can be utilised for its own expansion and b) being a well established player, strategic investor will be given stake at higher valuation thereby increasing the value of SSL's investment in Hypercity."

"Currently, we have Neutral rating on the stock with price target of Rs 344. With opening of FDI, probability of bringing in strategic foreign partners is high and hence the probability of Hypercity turning into profit earlier than expected improves. We continue to maintain our "Neutral" stance on the stock but due to positive sentiments, the stock is likely to react positively in the short term. We would revise our estimate, as more clarity emerges from the company and the final draft of the proposed bill, says Aditya Birla Money report.

Public holding more than 90% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment