Neutral Shoppers Stop; target of Rs 750: Motilal Oswal

Motilal Oswal recommended Neutral rating on Shoppers Stop with a target price of Rs 750 in its research report dated October 23, 2024.

Broker Research

October 24, 2024 / 19:34 IST

Neutral

Motilal Oswal's research report on Shoppers Stop

Shoppers Stop (SHOP) reported an 8% YoY decline in EBITDA (12% miss) due to weak SSSG and GM contraction. Revenue was up 4% YoY as store additions and the robust 11% YoY growth in the Beauty segment was offset by an overall SSSG decline and a 15% YoY decline in private brands revenue. The management indicated that LFL growth recovered in Sep (+9% YoY) and remains optimistic on demand recovery in 2HFY25 on account of the higher number of weddings and recovery in discretionary spends. SHOP has aggressive store expansion plans for Intune (value fashion) and is focused on growing its Beauty business. We expect a CAGR of 11%/14% in SHOP’s revenue/EBITDA over FY24-27. We lower our FY25-26 revenue by 2%/7% and EBITDA by 5%/11% on weaker performance in 1HFY25. We value SHOP at 12x Dec’26E EV/EBITDA to arrive at our TP of INR750. Reiterate Neutral.

Outlook

We value SHOP at 12x Dec’26E EV/EBITDA to arrive at our TP of INR750. Reiterate Neutral.

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