Edelweiss' research report on Shoppers Stop
Shoppers Stop’s (SSL) Q3FY17 revenue and EBITDA came in line with our estimates, but PAT declined 15.3% YoY owing to higher depreciation. Key positives were: (i) LTL department store volume growth of 4.2% YoY was commendable on a high base of 15.9%, aided by festive season and double-digit growth seen in December; and (ii) 9.5% YoY LTL sales in Hypercity came on a soft base of 0.8% YoY decline, aided by food division.
OutlookKey negatives were: (i) 20.4%/38.8% YoY increase in lease charges/depreciation as 3 SSL and 1 Hypercity stores were added; and (ii) 79bps and 60bps dip in gross and EBITDA margins, respectively. We are enthused by SSL’s investments in omni-channels, and recovery in consumer spending. Maintain ‘BUY’.
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