Neutral Shoppers Stop; target of Rs 695: Motilal Oswal

Neutral

Motilal Oswal's research report on Shoppers Stop

Shoppers Stop (SHOP) reported 4% YoY growth in EBITDA (6% miss) in 4QFY24, as 9% YoY revenue growth was offset by inventory write-off and GM contraction of 270bp YoY. However, controlled costs supported EBITDA margin, which declined 70bp YoY.

Outlook

Persistent weakness in discretionary demand hinders revenue growth, with weak SSSG. Sustaining high single-digit SSSG will be crucial for driving overall growth and re-rating potential of the company. The stock is currently trading at a valuation of 12x/27x post/pre EV/EBITDA on FY26E. We broadly kept our estimates unchanged and factored in a CAGR of 15%/20% in revenue/EBITDA over FY24-26. We value SHOP at 10x FY26E EV/EBITDA to arrive at our TP of INR 695. Reiterate Neutral.

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