Neutral Shoppers Stop; target of Rs 700: Motilal Oswal

Motilal Oswal's research report on Shoppers Stop

Shoppers Stop (SHOP) reported in-line results, with a slight pick-up in revenue growth (+9% YoY) on 4% LFL growth (-4% YoY in 2Q). EBITDA rose 11% YoY, driven by higher gross margins on lower write-offs and improved intake margins in private brands. The management reiterated its guidance of maintaining ~5% LFL for 2HFY25 (4% in 3Q), supported by a higher number of weddings, and expects to open ~32 stores in 4Q (6 Department, 26 INTUNE). SHOP has aggressive store expansion plans for its fast fashion format, INTUNE (90-100 store openings in FY26), with break-even targeted by 3Q4QFY26. We believe the ramp-up in INTUNE will remain the key trigger.

Outlook

Our FY25-26 revenue/EBITDA estimates are broadly unchanged. We build in ~10% revenue/EBITDA CAGR for SHOP over FY24-27E. We value SHOP at 12x Mar’27E EV/EBITDA to arrive at our TP of INR700 (earlier INR670). Reiterate Neutral.