- 20 Oct 2022
- ICICIdirect Research
Shoppers Stop's revenue recovery accelerates in Q2FY23SHOPERSTOP - 648 Change: 5.10 (0.79 %)
On topline front, Shoppers Stop reported one of its highest ever Q2 sales with healthy growth of 60% YoY to Rs 1008.2 crore (on a favourable base). Revenue recovery rate continued its upward trajectory with company recording 119% revenue recovery rate in Q2FY23 vs. 113% in Q1FY23. Customer visits (online+offline) were at a record high of 40.8 million in Q2FY23 (Q2FY22: 25.3 mn, Q2FY20: 29.8 mn). Average transaction value improved 8% YoY to Rs 4069, which could be partly aided by price hikes. Higher focus on private label brands resulted in share of the same increasing by 130 bps YoY (340 bps higher vs. pre-Covid labels) to 15.2%. While gross margins improved YoY (by 300 bps), it remained constant at 41.2% if compared to pre-Covid levels. With revenues normalising and new store openings, operating overheads also reverted back to pre-Covid levels. Other expenses and employee expenses grew 38% and 50% YoY, respectively in Q2FY23. SSL reported EBITDA margin of 16.6% vs. 11.2% in Q2FY22 (Q2FY20: 16.2%). The company reported PAT worth Rs 18.1 crore vs. net loss of Rs 3 crore (Q2FY20: loss Rs 5.4 crore).
As on H1FY23, the company has opened three departmental store taking the count to 91 (3.8 million sq ft). The company is on track to open another nine stores during the year with six stores already under fit-outs. On the b/s front, inventory is up nearly 55% YoY mainly due to higher stocking in anticipation of a strong festive quarter. Despite higher investments in working capital, SSL generated healthy operating cashflows worth Rs 104 crore (vs. negative OCF: Rs 33 crore in Q2FY22). Capex also accelerated YoY by more than 2x to Rs 72 crore on enhanced investments in store additions. Its liquidity position remains fairly stable with cash & investments worth Rs 147 crore and debt worth Rs 134 (net surplus Rs 13 crore, D/E: 0.2x). With healthy store addition pipeline and strong anticipated festive season, we expect revenue trajectory to further improve, going forward. Despite, recent run up in the stock price, SSL continues to trade at reasonable valuations (~13x EV/EBITDA FY24E). We remain positive on the stock.