Neutral Shoppers Stop; Target Of Rs 190: Motilal Oswal
Motilal Oswal recommended Neutral rating on Shoppers Stop with a target price of Rs 190 in its research report dated October 20, 2020.
Oct 21, 2020 / 02:41 PM IST
Motilal Oswal 's research report on Shoppers Stop
Shoppers Stop (SHOP)'s revenues were down 65% YoY, impacted by COVID-19, as operational days were down 20% and footfall was down ~60% YoY. Despite this, better-than-expected cost-control measures - with a ~75% reduction in operating expense and rental exemptions - restricted EBITDA loss to INR347m (v/s INR679m expected operating loss). The pre-festive season saw healthy demand and an increase in footfall, albeit lower than last year. We cut our revenue/EBITDA estimate for FY21 by 10%/10% due to the prolonged impact of COVID-19. However, we raise our FY22 revenue/EBITDA by 5-6%, factoring FY21/FY22E EBITDA of INR1.4b/INR4.7b.
We value SHOP on an SOTP basis. We assign EV/EBITDA of 7x to standalone (Shoppers Stop) & EV/sales of 1x to Crossword on FY22E, to arrive at TP of INR190. Maintain Neutral.
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