Stock Broking firm ICICI Securities Limited is bullish on Shoppers Stop Limited and has given ‘Add’ call for a Target of Rs 365 in a time horizon of 6 months.
Market Price on Recommendation : Rs 340 on 25th Mar 2011
Target Price : Rs 365
Time Horizon : 6 months
Potential Upside : 8%
According to the Broking firm, the investors can buy the stock on dips with a 6 month target of Rs 365. The Indian retail sector is expected to see a transition from unorganised to the organised sector. The share of organised retail is expected to increase from 6% (FY10) to 12.4% in FY14E. Growing purchasing power of the middle class, increasing urbanisation as well as population (28%) in the median age group would fuel discretionary spends. We expect the dual levers of departmental stores expansion and HyperCity to enable Shoppers Stop (SSL) to grow its consolidated revenues at 36% CAGR in FY10-13E to Rs 3,883 crore.
Valuations : At the CMP, Shoppers Stop (SSL) is trading at a P/E of 32.3x FY12E EPS and 22.3x FY13E EPS. With an established brand name, aggressive space expansion plans and improved profitability, we expect SSL’s earnings to grow at 53% CAGR in FY10-13E. However, we believe the stock is trading close to its fair value given the significant jump in its price (72% in a year vs. 5% for the Nifty). We have valued the stock at Rs 365/share using the EV/sales methodology at 1.0x FY12E sales. We are initiating coverage on the stock with an ADD rating.
However another Broking firm Angel Broking has recommended ‘NEUTRAL’ rating on the stock in its 6th May, 2011 research report.
Share’s Data :-
BSE Code : 532638
Mkt. Cap : Rs 2,791.40 Crores
Shoppers Stop Ltd. share’s CMP is Rs 340.00 on 25th Mar 2011.
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