Shoppers stop extending gains after promoters raise stakes; Increases by 45% in 1 month

Shoppers Stop shares surged 6 per cent and reached a 52-week high of Rs 460 on BSE in trade during Thursday. The stock continued its rise to the fourth day, after rising by 14 percent during the period, after its promoters raised their stake in the company via the open market. Furthermore, the stock is up 27 percent in the past six trading days. By comparison, the S&P BSE Sensex was down 0.46 percent at 57,422 points at 01:48 pm.

On Monday, March 21, 2022, the group of shoppers suspended the promoters – Raghukool Estate Developement LLP, Casa Maria Properties LLP, Palm Shelter Estate Development LLP and Capstan Trading LLP – collectively buying 74,000 shares of stock worth Rs 3 crore for the company from the open market. Vendor names cannot be confirmed immediately. Click here for details

Meanwhile, in the past month, Shopper Stop outperformed the market with a 45 percent gain, compared to a 5.5 percent rise in S&P BSE Sensex. Within six months, it was up nearly 90 percent versus a 4 percent decline in the benchmark. The stock reached a record high of Rs 654 on September 3, 2018.

For the October-December quarter (FY22 third quarter), Shoppers Stop reported strong operating performance as ebitda margins improved 580 basis points year-over-year to 19.2 percent.

The company said EBITDA performance was driven by a strong recovery in demand and tight cost control, while e-commerce sales continued to grow rapidly, up 39 percent. The company is now net debt free again.

In Q3 FY22, Shopper’s Stop revenue grew 35 per cent YoY to Rs 1,070 crore. Healthy demand due to the festive season and strong wedding brought the company to levels close to pre-Covid levels in Q3 FY22. The company reported a profit after tax (PAT) of Rs 50 crore in Q3 FY22, as against a loss 21 crore in the third quarter of fiscal year 21.

“The company’s revenue was negatively affected in January 2022 by Covid-19, but it recovered strongly and almost reached pre-Covid levels in February 2022. Moreover, the early trend in March 2022 indicated the revenue metric to exceed pre-Covid levels,” the company said. Motilal Oswal Financial Services in a company update.

Management aims to double revenue over the next three or four years backed by its strategy of adding 10-12 percent new stores annually, its initiative to revive the SSSG to a high single or double digit on improving new store productivity and a focus on strong private labels. Growth in the beauty sector and e-commerce initiatives.

Even if the company achieves 60-70 percent of its guidance, the street’s expectations may be greatly surprised. The brokerage said the pace of store additions and the SSSG remain two of the most important controls. However, the stock was trading above its target price of Rs 400 per share.

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