ICICI Direct recommended hold rating on Shoppers Stop with a target price of Rs 510 in its research report dated May 03, 2019.
ICICI Direct's research report on Shoppers Stop
Revenues for Q4FY19 de-grew 6.9% YoY to Rs 791.1 crore. If adjusted for Ind-As accounting changes, revenue growth was at 4.7% YoY to Rs 888.9 crore. Growth was mainly driven by SSSG of 3.7% as only one departmental store was added in Q4FY19. EBITDA margins (on adjusted revenue) improved 58 bps YoY to 6.6%, mainly on account of a decline in other expenses. During the quarter, the company provided for one-off depreciation cost, which negatively impacted PAT. Subsequently, PAT for the quarter declined 45% YoY to Rs 11.4 crore.
We roll our estimates to FY21E and expect revenue and EBITDA to grow at a CAGR of 11% and 14%, respectively, in FY19-21E. Sustainable enhancement in SSSG and increase in share of private label brands would be critical for re-rating of the stock. We maintain our HOLD recommendation on the stock with a revised target price of Rs 510 (13.5x FY21E EV/EBITDA).
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