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  • 27 Jul 2022
  • ICICIdirect Research

Revenue surpasses pre-covid levels with strong operational performance

SHOPERSTOP - 893 Change: 2.65 (0.30 %)

News: Shoppers Stop reported healthy operational performance in a disruption free quarter. Owing to strong wedding season and wardrobe refresh, revenue recovery rate surpassed pre-covid levels for the first time in Q1FY23 (113% of pre-covid levels). On a favourable base, revenue grew by 368% YoY (up 33% QoQ) to Rs 941.9 crore. Share of private label brands improved 100 bps QoQ to 14.3% with apparel private label contributing at 20.6%. Gross margins improved 210 bps QoQ (up 350 bps YoY) to 42.2%. With revenues normalising, operating overheads too reverted back to pre-covid levels. Other expenses and employee expenses grew by 95% and 33% YoY, respectively in Q1FY23. SSL reported EBITDA margin of 17.2% vs. -31.2% in Q1FY22 (Q1FY20: 16.6%). Company reported PAT worth Rs 22.8 crore vs. net loss of Rs 117.7 crore (Q1FY20: PAT Rs 2.4 crore).

Views: Customer footfalls have now reached near pre-covid levels with average basket value higher by ~31% to Rs 4344. Company has embarked on an healthy store addition plans with opening of 10 new departmental stores and 11 beauty stores in 9MFY23. The capex for the same is expected to be Rs 100 crore which will be funded mainly through internal accruals. Owing to enhanced profitability and better working capital management, company generated positive FCF worth Rs 23 crore in Q1FY23 (vs. negative FCF of Rs 110 crore in Q1FY22). Company’s liquidity position remains fairly stable with cash & investments worth Rs 183 crore and debt worth Rs 175 (net surplus Rs 8 crore, D/E: 0.3x). . With healthy store addition pipeline and sustained investments in omni-channel, we expect revenue trajectory to further improve going forward. Despite, recent run p in the stock price, SSL continues to trade at reasonable valuations (~1.7x EV/Sales FY24E).

Impact: Positive.