Shares of Shoppers Stop surged nearly 6% in intraday trade on Friday after the company posted a consolidated net profit of ₹16.20 crore for the September ending quarter as against a net loss of ₹3.6 crore in the same quarter of the last fiscal.
In Friday's trade, the stock opened with a gap up of ₹24.9 at ₹799.70 and surged further to hit a new 52-week high of ₹820 but the stock failed to maintain this bullish direction and dropped to below 800 levels. At 12:30 p.m., the stock was trading at around ₹804, up by 3.77% on the BSE.
Shoppers Stop is a small-cap stock with a market capitalization of over ₹8,815 crore. The company is engaged in the business of retailing a variety of household and consumer products through departmental stores.
On October 20, Shoppers Stop reported a 43% YoY rise in total revenue at ₹1,016.6 crore compared to ₹709.6 crore in the same period last year. The company’s EBITDA grew almost two-fold to ₹165.2 crore in Q2FY23 as against ₹72.3 crore in the corresponding quarter of last year. Similarly, the EBITDA margin of the company increased by 45% year on year, from 11.26% to 16.32%, expanding by almost 506 bps.
The company posted a net loss of 132.8 crore in the March 2020 quarter due to the pandemic, and it posted a loss of 115.1 crore in the June quarter of 2020. The losses continued into the second quarter of 2022. But finally, it ended with a net profit of 50.2 crore in the third quarter of FY22.
The retail sector, which was severely affected by the COVID-19 pandemic, has rebounded strongly as a result of the relaxation of the lockdown and the results of vaccination.
Retail spending is also being boosted by credit expansion, which hit a 10-year high of 16.2% in August as firms and consumers took out loans to fund investments and purchases. According to media reports, the total lending market in India stood at ₹174.3 lakh crore in FY22, with the retail segment accounting for 48.9% of it.
The retail industry is expecting strong sales in the ongoing festive period. According to a Reuters report, sales including both online and offline during the festive period are estimated to reach $27 billion, which is almost double the amount in the same pre-Covid period in 2019, and nearly 25% higher than last year.
Shares of Shoppers Stop have surged 143.33% so far in 2022. The stock gained 71.42% in the last six months to Rs. 804, from Rs. 469. The stock has more than doubled investors' wealth in the last year, increasing by 186.55%. The stock has risen 92% since June. The share price of this fashion retailer rose 197.72% from its 52-week low of Rs. 270.6.
Foreign investors increased their stake in the company to 6.4% in the first quarter of FY23, up from 5.8% in the previous fiscal quarter. Promoters owned 65.6% of the company, while regular shareholders held 7.6%.
An average of 10 analysts polled by MintGenie have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.