Buy Shoppers Stop, target of Rs 320: IIFL

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IIFL has recommended a buy rating on Shoppers Stop with a price target of Rs 320, in its report dated October 6, 2009. The share closed at Rs 271.00, up Rs 1.00, or 0.37%.

"Shoppers Stop is already showing signs of having bottomed out in August, declining by 2.5% YoY in the month, as against the 7.5% YoY decline in 1QFY10. Higher SSS coupled with space addition of ~0.3m sq ft over each of the next three years, we reckon, will drive a revenue CAGR of 20% over FY10-12ii. We estimate earnings growth will be faster still, at an annualised 74% over the same period, led by operating efficiency and management's cost containment initiatives. Turnaround in business fundamentals, improving profitability and valuations that still look accommodative, are the three factors underpinning our positive view on the stock. 'Buy' with target price of Rs 320," says IIFL's report.

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