Buy Shoppers Stop, target Rs 680: Edelweiss

Edelweiss has a buy call on Shoppers Stop Ltd. with a target price of Rs 680. The current market price of Shoppers Stop Ltd. is Rs 557.15 Time period given by the brokerage is a year when Shoppers Stop Ltd. price can reach defined target. Shoppers Stop Ltd., incorporated in 1997, is a midcap company with a market cap of Rs 4902.36 crore.

Investment rationale by Edelweiss

We recently met Mr. Rajiv Suri, new Managing Director and CEO of Shoppers Stop (SSL). SSL’s operating performance has been soft over the past two years, and our interaction with the CEO makes us believe that SSL can turn around in light of the proposed structural changes. Key takeaways are: 1) sharper focus on private labels via greater investments (e.g. hiring a new team) and adoption of differentiated marketing strategies; 2) plans afoot to integrate SSL operations with Amazon togenerate more footfalls; 3) new discount vouchers helping stay ahead of competition; and (iv) scale up of beauty portfolio, wherein SSL already has a pole position. Besides, the company is targeting to be debt-free, which will be an added boost. Maintain ‘BUY’.