Edelweiss Research is also available on www.edelresearch.com,
Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset.
Edelweiss Securities Limited
Shoppers Stop’s (SSL) Q4FY13 sales jumped 15% YoY with PAT increasing
10.4% YoY. Key positives include: (1) departmental store like-to-like (LTL)
sales at 10% YoY despite high base of 10% and economic slowdown; and
(2) surge in HyperCity’s LTL gross margin to 21% (20.7% in Q4FY12) and a
significant rise in LTL sales growth to 11% (3% in Q3FY13). Key negative
was 53bps YoY decline in EBITDA margin. Expansion momentum
continued with a net addition of seven stores (five in Q3FY13). With
restoration of zero excise duty on branded apparel, we anticipate
recovery in SSL’s sales volume as gross margin benefit is passed on
partially to consumers. Also, with a robust expansion plan (to add 8
departmental stores and 2 HyperCity stores in FY14) mostly funded by
internal accruals, we maintain ‘BUY’.
This report also contains Q4FY13 conference call highlights.
Gross margin expands, but high expenses dent EBITDA margin
SSL’s standalone revenue surged 15% YoY aided by LTL volume growth of 1% YoY and
9% increase in ASP. Gross margin expanded 121bps YoY in Q4FY13. However, EBITDA
margin declined 53bps YoY due to rise in staff cost (up 69bps YoY), electricity (up 15bps
YoY) and other expenses (up 67bps YoY). Net profit grew 10.4% YoY to INR152mn.
HyperCity sales recover; LTL maintained
Average selling price in the departmental store format rose 9% YoY to INR1,028,
though LTL volumes increased a mere 1% YoY (LTL volume had increased 3.5% YoY in
Q3FY13 aided by the festive season). First Citizen members club touched 2.888mn,
which contributes 69% to sales. HyperCity reported a net loss of INR218.7mn, though
store level profit surged for the seventh consecutive quarter.
Outlook and valuations: Consumer sentiment improving; maintain ‘BUY’
On FY15E, we assign EV/sales target of 1x to HyperCity business and 1.2x to SSL
departmental business arriving at target price of INR498. With recovery in sales due to
reduction in apparel prices and likely recovery in discretionary spends, we maintain
‘BUY’ and rate it ‘Sector Performer’.
RESULT UPDATE
SHOPPERS STOP Loosening purse strings spur sales
EDELWEISS 4D RATINGS
Absolute Rating BUY
Rating Relative to Sector Performer
Risk Rating Relative to Sector Low
Sector Relative to Market Overweight
MARKET DATA (R: SHOP.BO, B: SHOP IN)
CMP : INR 378
Target Price : INR 498
52-week range (INR) : 497 / 288
Share in issue (mn) : 83.0
M cap (INR bn/USD mn) : 31 / 582
Avg. Daily Vol.BSE/NSE(‘000) : 111.9
SHARE HOLDING PATTERN (%)
Current Q3FY13 Q2FY13
Promoters *
67.5 67.6 67.6
MF's, FI's & BK’s 10.6 10.4 10.4
FII's 9.6 9.7 9.4
Others 12.3 12.4 12.6
* Promoters pledged shares
(% of share in issue)
: 8.5
PRICE PERFORMANCE (%)
Stock Nifty
EW Retail
Index
1 month (5.1) 5.2 (0.0)
3 months (13.8) 0.0 (9.0)
12 months 7.5 14.3 0.6
Abneesh Roy
+91 22 6620 3141
Hemang Gandhi
+91 22 6620 3148
Pooja Lath
+91 22 6620 3075
India Equity Research| Retail
May 2, 2013
Financials
Year to March Q4FY13 Q4FY12 % change Q3FY13 % change FY13 FY14E FY15E
Revenues (INR mn) 6,757 5,863 15.3 6,531 3.5 33,603 42,051 49,284
EBITDA (INR mn) 383 363 5.4 453 (15.4) 961 1,566 2,121
Net profit (INR mn) 152 137 10.4 171 (11.2) (113) 459 656
Diluted EPS (INR) 1.8 1.7 9.8 2.1 (11.3) (1.4) 5.5 7.9
Diluted P/E (x) NM 68.3 47.8
EV/Sales (x) 1.1 0.9 0.7
ROAE (%) NM 8.9 11.9
Quarterly numbers are standalone; Annual numbers are consolidated
Retail
2 Edelweiss Securities Limited
Q4FY13 Conference call | Key takeaways
Q4FY13 sales: 15% YoY sales growth in SSL departmental stores as well as overall growth in
Q4FY13. SSL’s LTL sales grew 10% YoY. While LTL sales growth for stores greater than five
years was 4%, for stores less than five years it was 19%. Sales per sq. ft. on chargeable area
stood at INR2,109 (INR1,993 in Q4FY12). Contribution of apparel sales increased to 60.3% in
Q4FY13 compared to 59% in Q4FY12. Non-apparel consists of home, leather, watches,
jewellery, electronics and personal accessories. The share of non-apparel sales decreased to
41.0% in Q4FY13 vis-à-vis 39.7% in Q4FY12 primarily due to drop in fine jewellery sales. Fine
jewellery sales dipped slightly due to fluctuating gold prices. Private label sales increased by
14% YoY in Q4FY13. Private label mix increased 0.1% during the quarter.
Number of stores: As of FY13 end, there were 55 SS stores, 42 Crossword stores, 13 Home
Stop stores, 4 Mother Care stores, 46 MAC/Estee/Clinique stores and 12 HyperCity stores.
This amounts to more than 4.81mn sq. ft. across 25 cities.
LTL growth in FY14: 7-8% LTL growth expected in FY14. H1FY14 is expected to perform well
as the base is low.
Q4FY13 segment-wise YoY sales growth: Food grew 12%, fashion 37%, sports 17%;
electronics category declined.
FY13 segment-wise sales YoY growth: Fashion 28% growth, food 5% growth.
Discount season in FY13: Less than 20% of FY13 sales were during discount season.
Discounting period in Q4FY13: There was only one week of extra discounting period
(compared to the normal run rate) in Q4FY13. There was one week of less discounting
period compared to Q4FY12. In spite of this, volume grew 1% YoY. The reduction in
discounting period boosted margins and apparel growth.
Region-wise performance: North and East India have been doing well. This is followed by
South India. Lowest growth in West India. As per management, a booming stock market
improves consumer sentiment.
Full price merchandise sales in FY13: Sales have been 3-5% higher than FY12.
EBITDA margin expectations: In FY14, there will not be much change in EBITDA margin.
Excise benefits: As per management expectations, approximately one third of excise
benefit will be passed on to customers, one third will be used for advertising and promotion
and one third will be retained in margin.
New store opening plans in FY14: SS – 8, HyperCity – 2, Specialty - 10, Home stop - 2. Out
of these, as of April 2013 end, 3 SS stores, 1 HyperCity (30,000 sq. ft) store, 1 Home Stop
store, 3 Specialty stores have been opened.
HyperCity: The Company is open to operating HyperCity stores in both malls and non-mall
properties. Shoppers Stop will not be competing with Ikea. Currently, there are 4 positive
EBITDA Hyper city stores.
Shoppers Stop
3 Edelweiss Securities Limited
Apparel share in HyperCity sales: Apparel comprised 9.8% of sales mix in Q4FY13.
Volume growth in HyperCity: All categories posted volume growth, except CDIT (Consumer
Durables and IT business). Food volumes increased 2%. Fashion volumes increased 56%.
EBITDA breakeven in HyperCity: The Company is focusing on revenue growth. Signing new
smaller stores and downsizing existing stores. Aim to grow apparel sales to 15% of total
sales (from 7.5% currently). All these 3 parameters will lead to EBITDA breakeven in the
next 2 years.
Compact HyperCity format (30,000 sq. ft): The compact format has an area of 30,000 sq. ft.
It does not have furniture and electronics (as a separate section). Going ahead, half of the
new stores to be opened will be of compact format. Compact HyperCity stores will be used
to complement the larger formats. Globally, this size is called a supermarket rather than a
hypermarket. No compact HyperCity store is planned in Mumbai in the next 18 months at
least. Trading densities in compact HyperCity stores are likely higher than larger format
stores by more than 20%.
Consumer sentiment: In H1FY13, consumption trend was slow. However, in H2FY13, the
consumption trend has improved vis-à-vis H1FY13.
Pune and Chennai: Facing tough competition in these cities as there is excess retail space.
MAC/Estee/Clinique: These are amongst the most productive and profitable formats and
hence the company plans to scale them further.
Shop in Shop: Shop in Shop will always be more profitable than standalone.
Cash from operations: INR1.2-1.25bn in FY14.
Per square feet capex: INR1,500 for both SS and HyperCity.
Capex: Same as expected cash level in FY14 (INR1.2-1.25bn). 85% of HyperCity capex will be
met via internal cash generation while balance will be via debt. Currently, there is INR3.3bn
debt in SS, INR1.5 in HyperCity.
Outlook and valuations: Consumer sentiment improving; maintain ‘BUY’
With restoration of zero excise duty route, as existed prior to Budget 2011-12, in respect of
branded readymade garments and made ups, SSL is expect to see at least 50bps YoY gross
margin expansion. As the company passes on this benefit to consumers, we expect volumes
to recover gradually, further aided by recovery in discretionary spending led by interest rate
cuts and reforms. SSL is one of the best run retail companies and will reap benefits of
expansion and FDI in HyperCity over the long term.
We value SSL on EV/sales as the company is operating at low profitability (due to losses in
HyperCity) which does not reflect the inherent profitability of the current business (thus
EV/EBITDA or P/E valuation is not fair). As we roll over to FY15 we assign EV/sales target for
HyperCity business of 1x and 1.2x to SSL departmental business. We arrive at target price of
INR498. Maintain ‘BUY’ and rate it ‘Sector Performer’.
Retail
4 Edelweiss Securities Limited
Chart 1: LTL sales growth YoY improve Chart 2: SSL sales growth YoY
Chart 3: LTL volume growth for departmental stores Chart 4: Sales per sq. ft. on chargeable area
Chart 5: Customer entry declines YoY Chart 6: Conversion ratio improves YoY
Source: Company, Edelweiss research
0.0
7.0
14.0
21.0
28.0
35.0
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2
FY
12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
(%)
Deparment stores All formats
(10.0)
(4.0)
2.0
8.0
14.0
20.0
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2
FY
12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
(%)
LTL volume growth departmental store
4.0
6.0
8.0
10.0
12.0
14.0
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2
FY
12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
(mn
)
Customer entry
0.0
7.0
14.0
21.0
28.0
35.0
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2
FY
12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
(%)
Conversion ratio (%)
0
600
1,200
1,800
2,400
3,000
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2
FY
12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
(IN
R)
Shoppers' stop deparment stores
(12.0)
0.0
12.0
24.0
36.0
48.0
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2
FY
12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
(%)
SS deparment stores Stores>5yrs Stores<5yrs
Shoppers Stop
5 Edelweiss Securities Limited
Chart 7: Transaction size up YoY Chart 8: Average selling price up YoY
Chart 10: Private label mix Chart 10: % sale mix
Chart 11: Division wise sales Chart 12: Category wise sales
Source: Company, Edelweiss research
1,600
1,850
2,100
2,350
2,600
2,850
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2
FY
12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
(IN
R)
Transaction size
15.0
15.1
15.1
15.2
15.2
15.2
Private label mix
(%)
Q4FY12 Q4FY13
0.0
14.0
28.0
42.0
56.0
70.0
Apparels Non Apparels
(%)
Q4FY12 Q4FY13
0
260
520
780
1,040
1,300
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2
FY
12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
(IN
R)
Average selling price
0.0
10.0
20.0
30.0
40.0
50.0
Mens Ladies Childrens Non
Apparels
(%)
Q4FY12 Q3FY13
0.0
12.0
24.0
36.0
48.0
60.0
Bought Out Consignment/
SOR
Concession
(%)
Q4FY12 Q4FY13
Retail
6 Edelweiss Securities Limited
Chart 13: HyperCity- LTL sales growth improve YoY Chart 14: HyperCity- Expansion back on track
Source: Company, Edelweiss research
Table 1: HyperCity P&L snapshot
Source: Company, Edelweiss research
0.0
5.0
10.0
15.0
20.0
25.0
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2
FY
12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
(%)
(INR mn) Q4FY13 Q4FY12 % change (YoY)
Retail sales (including VAT) 18,968 17,802 6.5
Retail sales (net of VAT) 17,568 16,366 7.3
Margin on sales 3,692 3,462 6.6
DC cost 232 215 7.9
Shrinkage 87 141 (38.3)
Gross margin 3,373 3,106 8.6
Store operating expenses 3,783 3,458 9.4
Other retail operating income 517 363 42.4
Store EBITDA 107 11 872.7
Service office expenses 960 952 0.8
Company EBIDTA (853) (941) NM
Exceptional item - - NM
Depreciation 530 430 23.3
Finance charges 804 853 (5.8)
PAT (2,187) (2,224) NM
0
4
8
12
16
20
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
E
(No
s.)
Shoppers Stop
7 Edelweiss Securities Limited
Financial snapshot (INR mn)
Year to March Q4FY13 Q4FY12 % change Q3FY13 % change FY13 FY14E FY15E
Net revenues 6,757 5,863 15.3 6,531 3.5 33,603 42,051 49,284
Raw material costs 4,454 3,935 13.2 4,209 5.8 22,619 28,461 33,070
SG&A 759 619 22.6 718 5.7 3,950 4,670 5,473
Employee expenses 437 339 29.1 433 1.1 2,359 2,851 3,342
EBITDA 383 363 5.4 453 (15.4) 961 1,566 2,121
Depreciation 125 115 9.0 120 4.1 791 743 830
Other income 35 44 (20.2) 32 7.0 69 101 101
Interest 79 74 6.4 86 (8.6) 547 536 570
Exceptionals - - - (7) - -
Profit before tax 214 218 (2.0) 279 (23.3) (308) 389 821
Provision for taxes 62 81 (23.1) 108 (42.4) 228 194 287
Core profit 152 137 10.4 171 (11.2) (535) 194 534
Minority interest - - - 430 265 123
Net profit 152 137 10.4 171 (11.2) (106) 459 656
Diluted EPS (INR) 1.8 1.7 9.8 2.1 (11.3) (1.4) 5.5 7.9
As % of net revenues
Purchases (% of revenue) 65.9 67.1 64.5 67.3 67.7 67.1
Employee cost 6.5 5.8 6.6 7.0 6.8 6.8
SG&A 11.2 10.6 11.0 11.8 11.1 11.1
EBITDA 5.7 6.2 6.9 2.9 3.7 4.3
Reported net profit 2.2 2.3 2.6 (0.3) 1.1 1.3
Quarterly numbers are standalone; Annual numbers are consolidated
Retail
8 Edelweiss Securities Limited
Company Description
SSL, part of the K Raheja Group of Companies, is a focused luxury segment department store
player. It has presence in high opportunity segments like home improvement through Home
Stop; infant and mothers to be care through Mothercare (a franchise with Mothercare PLC);
cosmetics and beauty care through M.A.C. and Clinique (a retail agreement with Estee
Lauder); the books and music space through Crossword; and in airport retailing through a JV
with Nuance from Switzerland. It also acquired majority stake in HyperCity, a hypermarket
venture promoted by a group company which focuses on mass segment of retailing.
Shopper’s Stop Ltd along with its associate companies HyperCity Retail (India) Ltd and
Timezone Entertainment Pvt. Ltd operates more than 4.82mn sq ft in the country.
Investment Theme
The Indian retail landscape is evolving with interplay of several demographic and economic
factors. The big opportunity lies in the growing share of organised retail with the growing
trend among consumers to allocate a larger share of income to consumption and gradual
improvement in lifestyle. The improving liquidity is also positive as it means better delivery
of retail space for expansion. SSL is a niche play with strong brand position in the lifestyle
space. It has assiduously positioned itself as a retailer since 1991 of superior quality
products and services, offering an international shopping experience. This strong positioning
and brand recall gives the company a strategic advantage in the light of increasing
competition. With its steadfast focus on systems and processes and its ability to attract
global brands as venture partners, it is well placed to emerge as a leading departmental
store player in the long run.
Key Risks
Store rollout delays
A large number of retailers are facing delays in roll outs due to delays by developers. This is
a significant risk and can lead to cost overruns. Additionally, delays can also lead to capital
crunch with a large number of stores bunching up.
Increased competition
Pressure on margins due to cost escalation and competition
Escalation in lease rentals
Escalation in lease rentals and administration expenses can impact margins
9 Edelweiss Securities Limited
Shoppers Stop
Financial Statements
Income statement (INR mn)
Year to March FY12 FY13E FY14E FY15E
Net revenue 29,454 33,603 42,051 49,284
Materials costs 20,038 22,619 28,461 33,070
Gross profit 9,416 10,983 13,591 16,214
Employee costs 1,997 2,359 2,851 3,342
Electricity expenses 700 894 1,074 1,259
Rent and lease expenses 2,376 2,819 3,430 4,020
Other Expenses 2,678 3,227 3,760 4,407
Advertisement & sales costs 629 723 909 1,065
EBITDA 1,037 961 1,566 2,121
Depreciation & Amortization 609 791 743 830
EBIT 428 170 823 1,290
Other income 72 69 101 101
EBIT incl. other income 499 239 924 1,391
Interest expenses 422 547 536 570
Profit before tax 77 (308) 389 821
Provision for tax 322 228 194 287
Net profit (245) (535) 194 534
Exceptional - (7) - -
Minority interest 434 430 265 123
Profit after minority interest 190 (113) 459 656
Shares outstanding (mn) 83 83 83 83
Diluted EPS (INR) 2.3 (1.4) 5.5 7.9
Dividend per share (INR) 0.8 0.4 1.7 2.4
Dividend payout (%) 32.6 30.0 30.0 30.0
Common size metrics
Year to March FY12 FY13E FY14E FY15E
Electricity expenses 2.4 2.7 2.6 2.6
Rent and lease expenses 8.1 8.4 8.2 8.2
Materials costs 68.0 67.3 67.7 67.1
Advertising & sales costs 2.1 2.2 2.2 2.2
EBITDA margins 3.5 2.9 3.7 4.3
Net profit margins 0.6 (0.3) 1.1 1.3
Growth ratios (%)
Year to March FY12 FY13E FY14E FY15E
Revenues 27.8 14.1 25.1 17.2
EBITDA (19.6) (7.4) 63.0 35.4
Net profit (56.0) NM NM 43.0
EPS (57.6) NM NM 43.0
Key Assumptions
Year to March FY12 FY13E FY14E FY15E
Macro
GDP(Y-o-Y %) 6.5 5.0 6.5 7.0
Inflation (Avg) 8.8 7.8 6.0 6.0
Repo rate (exit rate) 8.5 7.5 6.8 6.0
USD/INR (Avg) 47.9 54.5 55.0 53.0
Company
Revenue growth (Y-o-Y %)
Shoppers - Departmental store sales growth (%) 16.8 16.9 20.7 16.5
Shoppers - other format sales growth (%) NM 20.0 23.0 23.0
Shoppers - departmental store - Total No. of 51 59 67 75
Shoppers - departmental store - New store 11 8 8 8
Shoppers - departmental- NEW Space addition 0.8 0.3 0.4 0.3
Shoppers - departmental- Total Space (mn sq. ft) 2.9 3.2 3.7 4.0
Shoppers - SSS growth (%) 7.0 6.5 9.5 9.5
Shoppers - Growth on new stores (%) 16.8 6.7 11.2 7.0
HyperCity net sales growth (%) 27.4 17.0 19.3 18.1
HyperCity New store addition 3 - 2 2
HyperCity Total stores 12 12 15 17
HyperCity- New space addition (mn Sq ft) 0.3 - 0.1 0.1
HyperCity Total Retail Space (mn sq. ft) 1.2 1.2 1.4 1.5
HyperCity - SSS growth (%) 9.0 13.0 10.0 10.0
HyperCity - Growth on new stores (%) 11.5 - 9.3 8.1
EBITDA margin (%)
Shoppers - COGS as % of sales 65.1 65.5 65.1 64.6
COGS as % of sales 68.0 67.3 67.7 67.1
Staff costs as % of sales 6.8 7.0 6.8 6.8
A&P as % of sales 2.1 2.2 2.2 2.2
Electricity expenses as % of sales 2.4 2.7 2.6 2.6
Rent and lease expenses as % of sales 8.1 8.4 8.2 8.2
Financial assumptions
Tax rate (%) 34.3 35.1 34.3 34.3
EBITDA margin 3.5 2.9 3.7 4.3
Capex (INR mn) 1,793 879 1,150 1,250
Interest payments 422 547 536 570
Debtor days 3 3 3 3
Inventory days 36 36 36 36
Payable days 55 55 55 55
Cash conversion cycle (days) (16) (16) (17) (17)
Interest rate on o/standing debt (%) 12.1 12.1 11.5 11.5
Depreciation as % of gross block 7.3 8.1 6.9 6.9
Dividend as % of net profit 32.6 30.0 30.0 30.0
Debt 4,357 4,657 4,957 5,257
10 Edelweiss Securities Limited
Retail
Peer comparison valuation
Market cap Diluted PE (X) EV/Sales (X) ROAE (%)
Name (USD mn) FY14E FY15E FY14E FY15E FY14E FY15E
Shoppers Stop 582 68.2 47.7 0.9 0.7 8.9 11.9
Jubilant Foodworks 1,364 37.7 29.1 3.7 2.8 36.4 33.3
Pantaloon Retail India Ltd 633 23.1 16.6 0.7 0.6 3.6 4.2
Titan Industries 4,523 27.5 22.6 1.8 1.5 38.9 36.3
Median 32.6 25.9 1.3 1.1 23.9 22.6
AVERAGE 33.3 24.9 1.6 1.3 23.9 22.4
Cash flow metrics
Year to March FY12 FY13E FY14E FY15E
Operating cash flow (53) 889 1,489 1,904
Investing cash flow (1,724) (879) (1,150) (1,250)
Financing cash flow 1,720 (293) (396) (499)
Net cash flow (57) (284) (56) 155
Capex (1,793) (879) (1,150) (1,250)
Dividends paid (134) (39) (160) (229)
Share issuance/(buyback) 2 - - -
Profitability & efficiency ratios
Year to March FY12 FY13E FY14E FY15E
ROAE (%) 3.7 (1.9) 8.9 11.9
ROACE (%) 5.0 1.8 8.7 13.0
Inventory day 36 36 36 36
Debtors days 3 3 3 3
Payable days 55 55 55 55
Cash conversion cycle (days) (16) (16) (17) (17)
Current ratio 1.4 1.4 1.3 1.3
Debt/EBITDA 4.2 4.8 3.2 2.5
Debt/Equity 0.8 0.9 0.9 0.9
Adjusted debt/equity 0.8 0.9 0.9 0.9
Interest coverage 1.0 0.3 1.5 2.3
Operating ratios
Year to March FY12 FY13E FY14E FY15E
Total asset turnover 3.4 3.6 4.5 5.0
Fixed asset turnover 5.0 5.1 6.2 6.9
Equity turnover 5.8 6.6 8.2 8.9
Valuation parameters
Year to March FY12 FY13E FY14E FY15E
Diluted EPS (INR) 2.3 (1.4) 5.5 7.9
Y-o-Y growth (%) (57.6) NM NM 43.0
CEPS (INR) 4.4 3.1 11.4 16.5
Diluted PE (x) 164.6 NM 68.2 47.7
Price/BV (x) 6.1 6.2 5.9 5.5
EV/Sales (x) 1.2 1.1 0.9 0.7
EV/EBITDA (x) 34.1 37.0 22.7 16.8
Dividend yield (%) 0.2 0.1 0.4 0.6
Balance sheet (INR mn)
As on 31st March FY12 FY13E FY14E FY15E
Equity capital 413 413 413 413
Reserves & surplus 4,748 4,595 4,894 5,322
Shareholders funds 5,160 5,008 5,307 5,734
Minority interest (BS) 39 (390) (655) (777)
Short term debt 2,883 3,074 3,272 3,470
Long term debt 944 1,025 1,091 1,157
Current maturity of long term 530 559 595 631
Borrowings 4,357 4,657 4,957 5,257
Deferred tax liability 2 2 2 2
Sources of funds 9,559 9,277 9,611 10,216
Tangible assets 5,982 6,091 6,548 6,917
Intangible assets 179 179 179 179
CWIP (incl. intangible) 321 300 250 300
Total net fixed assets 6,481 6,570 6,977 7,397
Goodwill on consolidation 987 987 987 987
Non current investments - - - -
Cash and equivalents 150 (134) (190) (35)
Inventories 3,311 3,309 4,129 4,826
Sundry debtors 258 260 314 355
Loans and advances 2,737 2,737 2,737 2,737
Other current assets 125 125 125 125
Total current assets (ex cash) 6,432 6,432 7,306 8,043
Trade payable 3,333 3,419 4,310 5,017
Others current liabilities 1,159 1,159 1,159 1,159
Total current liabilities & 4,492 4,578 5,469 6,176
Net current assets (ex cash) 1,940 1,853 1,837 1,867
Uses of funds 9,559 9,277 9,611 10,216
Book value per share (INR) 62.3 60.4 64.0 69.2
Free cash flow (INR mn)
Year to March FY12 FY13E FY14E FY15E
Net profit 190 (113) 459 656
Add : Non cash charge 597 915 1,014 1,278
Depreciation 609 791 743 830
Others (13) 124 271 448
Gross cash flow 787 802 1,473 1,934
Less: Changes in WC 269 (87) (17) 30
Operating cash flow 518 889 1,489 1,904
Less: Capex 1,793 879 1,150 1,250
Free cash flow (1,275) 9 339 654
11 Edelweiss Securities Limited
Shoppers Stop
Top 10 holdings
Perc. Holding Perc. Holding
Reliance Capital Trustee Co Ltd 6.92 Arisaig Partners Asia Pte Ltd 3.19
Miraj Marketing Pvt Ltd 2.24 Eastspring Invstment India 2.08
Zodiac Clothing Company 2.07 Bajaj Allianz Life Insurance Co 1.30
Vidya Inv Trading Co Pvt 1.23 Ashmore Emm Llc 1.15
Sundaram Asset Management Co Ltd 1.12 Lombard Odier Darier Hentsch 1.00
*as per last available data
Insider Trades Reporting Data Acquired / Seller B/S Qty Traded
27 Jun 2012 Reliance Capital Trustee Co. Limited Buy 1980500
13 Sep 2012 Mr. B. S Nagesh Sell 15000
29 Nov 2012 Mr. B S Nagesh Vice Chairman Sell 20000
10 Dec 2012 Mr. B S Nagesh, Vice Chairman Sell 39801
*in last one year
Bulk Deals Data Acquired / Seller B/S Qty Traded Price
20 Jun 2012 Small Cap World Fund Inc Sell 1985925 295.00
20 Jun 2012 Reliance Capital Trustee Co. Ltd A/C Reliance Equity Opportu Buy 740500 295.00
20 Jun 2012 Reliance Capital Asset Management Ltd A/C Regular Saving Buy 1000000 295.00
*in last one year
Additional Data
Directors Data
Chandru L. Raheja Chairman Ravi C. Raheja Director
Neel C. Raheja Director Gulu L. Mirchandani Director
Shahzaad S. Dalal Director Prof. Nitin Sanghavi Director
Deepak Ghaisas Director Nirvik Singh Director
B. S. Nagesh Vice Chairman Govind Shrikhande Managing Director
Auditors - Deloitte Haskins & Sells, Mumbai; Internal Auditors: KPMG
*as per last annual report
12 Edelweiss Securities Limited
Company Absolute
reco
Relative
reco
Relative
risk
Company Absolute
reco
Relative
reco
Relative
Risk
Future Retail HOLD SU H Jubilant Foodworks HOLD SP M
Shoppers Stop BUY SP L Titan Industries BUY SO L
RATING & INTERPRETATION
ABSOLUTE RATING
Ratings Expected absolute returns over 12 months
Buy More than 15%
Hold Between 15% and - 5%
Reduce Less than -5%
RELATIVE RETURNS RATING
Ratings Criteria
Sector Outperformer (SO) Stock return > 1.25 x Sector return
Sector Performer (SP) Stock return > 0.75 x Sector return
Stock return < 1.25 x Sector return
Sector Underperformer (SU) Stock return < 0.75 x Sector return
Sector return is market cap weighted average return for the coverage universe
within the sector
RELATIVE RISK RATING
Ratings Criteria
Low (L) Bottom 1/3rd percentile in the sector
Medium (M) Middle 1/3rd percentile in the sector
High (H) Top 1/3rd percentile in the sector
Risk ratings are based on Edelweiss risk model
SECTOR RATING
Ratings Criteria
Overweight (OW) Sector return > 1.25 x Nifty return
Equalweight (EW) Sector return > 0.75 x Nifty return
Sector return < 1.25 x Nifty return
Underweight (UW) Sector return < 0.75 x Nifty return
13 Edelweiss Securities Limited
Shoppers Stop
Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.
Board: (91-22) 4009 4400, Email: [email protected]
Vikas Khemani Head Institutional Equities [email protected] +91 22 2286 4206
Nischal Maheshwari Co-Head Institutional Equities & Head Research [email protected] +91 22 4063 5476
Nirav Sheth Head Sales [email protected] +91 22 4040 7499
Coverage group(s) of stocks by primary analyst(s): Retail
Future Retail, Jubilant Foodworks, Shoppers Stop, Titan Industries
Distribution of Ratings / Market Cap
Edelweiss Research Coverage Universe
Rating Distribution* 120 49 17 186
* - stocks under review
Market Cap (INR) 118 56 12
Date Company Title Price (INR) Recos
Recent Research
13-Mar-13 Retail Many overhangs; time to
enter?; EdelFlash
11-Mar-13 Pantaloon
Retail
Focus on debt reduction;
calibrated expansion;
EdelFlash
184 Hold
04-Feb-13 Jubilant
Foodworks
SSG slows as expected; store
expansions on track;
Result Update
1,136 Hold
> 50bn Between 10bn and 50 bn < 10bn
Buy Hold Reduce Total
Rating Interpretation
Buy appreciate more than 15% over a 12-month period
Hold appreciate up to 15% over a 12-month period
Reduce depreciate more than 5% over a 12-month period
Rating Expected to
14 Edelweiss Securities Limited
Retail
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