result update shoppers stop -...

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Edelweiss Securities Limited

Shoppers Stop’s (SSL) Q1FY18 revenue came in line, while EBITDA surpassed expectations. Key positives: i) 16.2% YoY LTL sales growth for departmental stores (5.7% YoY in base); and ii) EBITDA grew marginally by 31bps YoY as lease charges fell 49bps YoY. Key negatives: i) LTL HyperCity store volume fell 5.8% YoY; and ii) Fashion mix dipped to 16.8% from 17.3% in base (down 50bps YoY). Due to GST implementation, July was weak as supply was impacted for 15-18 days across categories and formats (our view: 7% YoY and 8% YoY LTL sale growth in departmental store and HyperCity in FY18, respectively). We are enthused by SSL’s investments in omni channels (expected to be implemented by Sept-Oct 2017) and expect its LTL sales growth to do well with recovery in urban consumption. Maintain ‘BUY’.

End-of-season sales boosts growth; one-off impacts HyperCity SSL reported LTL sales growth 19.8% YoY aided by advancement of end-of-season sales.

Excluding end-of-season sales, the company reported 12.0% YoY sales growth in

Q1FY18. Proportion of private labels slipped 150bps YoY due to the sale season. The

company has taken steps to improve private labels’ share, which will result in 200bps

improvement in FY19. HyperCity reported 2.4% YoY LTL sales growth with LTL volume

decline of 5.8% YoY. However, adjusting for non-operational stores due to mall issues,

HyperCity reported 6.0% YoY sales growth.

Q1FY18 conference call: Key takeaways In SSL, the company is targeting 8% YoY LTL growth in departmental stores (our view:

7% YoY growth) and 100bps YoY EBITDA margin expansion in FY18. In HyperCity, SSL

estimates 8-10% YoY sales growth (our view: 8% YoY growth) and EBITDA to break even

at company level in FY18. LTL online growth stood at 70% YoY. It will be fully omni

channel by September 2017.

Outlook and valuations: Positive; maintain ‘BUY’

The government’s recent directive (press note 3) on online players is a positive for

physical retailers. Further, SSL is envisaged to reap benefits of its expansion strategy

aided further by normal monsoon and improvement in discretionary spends. At CMP,

the stock is trading at 9.6x FY19E EV/EBITDA. We maintain ‘BUY/SP’ with an SoTP-

based target price of INR429.

RESULT UPDATE

SHOPPERS STOP EOSS boost to quarter performance

COMPANYNAME

EDELWEISS 4D RATINGS

Absolute Rating BUY

Rating Relative to Sector Performer

Risk Rating Relative to Sector Low

Sector Relative to Market Underweight

MARKET DATA (R: SHOP.BO, B: SHOP IN)

CMP : INR 349

Target Price : INR 429

52-week range (INR) : 406 / 265

Share in issue (mn) : 83.5

M cap (INR bn/USD mn) : 29 / 458

Avg. Daily Vol.BSE/NSE(‘000) : 74.7

SHARE HOLDING PATTERN (%)

Current Q4FY17 Q3FY17

Promoters *

67.1 67.1 67.1

MF's, FI's & BK’s 13.4 13.4 13.3

FII's 4.3 4.2 3.4

Others 15.1 15.4 16.1

* Promoters pledged shares (% of share in issue)

: 67.10

PRICE PERFORMANCE (%)

Stock Nifty

EW Retail Index

1 month 2.9 5.8 5.1

3 months (2.8) 8.3 4.0

12 months (6.5) 16.7 21.6

Abneesh Roy +91 22 6620 3141

[email protected]

Rajiv Berlia +91 22 6623 3377

[email protected]

Tanmay Sharma, CFA +91 22 4040 7586

[email protected]

Alok Shah +91 22 6620 3040

[email protected]

India Equity Research| Retail

July 31, 2017

Financials (INR mn)

Year to March Q1FY18 Q1FY17 % change Q4FY17 % change FY17 FY18E FY19E

Revenues 9,411 8,210 14.6 9,103 3.4 49,101 57,894 62,708

EBITDA 301 237 27.1 525 (42.7) 1,743 2,636 4,016

Adj. Profit (37) (136) (72.6) 117 (131.7) (241) 400 933

Adj. dil. EPS (0.4) (1.6) (72.6) 1.4 (131.7) (2.9) 4.8 11.2

Diluted P/E (x) (120.9) 72.7 31.2

ROAE (%) (13.1) (5.5) 13.7

Retail

2 Edelweiss Securities Limited

Q1FY18 conference call: Key takeaways

Hypercity (sales growth and EBITDA)

Excluding store related issues (one offs), SSL reported 6% YoY adjusted growth in

Q1FY18.

The company expects 8-10% YoY HyperCity growth in FY18.

It will improve store level EBITDA in FY18.

SSL expects EBITDA to be profitable at the company level in FY18.

The company will chase PAT profitability in FY19.

Sales growth (departmental store)

SSL reported LTL sales growth 19.8% YoY aided by advanced end of sales seasons.

The company reported double digit sales growth in April and May. Excluding advanced

sales season, the company reported 12.0% YoY sales growth in Q1FY18.

Sale season contributed 8% to sales.

In Q1FY18, Central, North and East regions did well.

July was weak as supply was impacted for 15-18 days across all categories and formats.

SSL expects 8% YoY same store sales growth in departmental stores.

Private labels (departmental store)

The company will improve private label share by 200bps in FY19.

Share of private labels fell due to sale season in Q1FY18.

EBITDA margin (departmental store)

SSL estimates 8.5% EBITDA margin in departmental stores over 3 years.

The company will improve EBITDA margin 100bps on standalone business in FY18 over

FY17.

It expects company level RoCE of 25%.

Store additions (departmental store)

The company did not add any departmental store in Q1FY18.

It has leased out some area to CCD which came back.

Further, SSL did not close any departmental store in Q1FY18.

The company will open 5 departmental store in 9mFY18 and another 10 in FY19.

Fashion share (Hypercity)

Fashion share got affected in Hypercity as the company focussed on food items.

Further, 2 big stores (Malad and Vashi), which were big spenders in fashion, were not

functioning.

Shoppers Stop


Hypercity (new format)

The company has started a small box self check out model.

Employee and rental costs are lower in these formats.

The company is planning to open 4 more stores in the next 2 quarters.

Steps taken in Q1FY18

SSL launched television campaigns (romance to retail) in East and South.

The campaign will be back in August and September.

New brand ‘Rheson’ was launched in 12 stores initially and currently expanded to 20

stores. It will be rolled out to 80 stores by FY18 end.

Sell out is near 90% for the new brand.

Further, it brings in younger audience. Price points start at INR399.

The company also started ‘Designer of the year award’.

SSL selected 8 designs which will be part of private label designs.

Omni-channel

SSL clocked 70% YoY growth in omni-channel.

The company invested INR600mn in 3 years.

Omni-channel will be implemented by September–October.

Other key takeaways

60% of loyalty customers contribute 80% to the revenue.

Service tax is 1.6-1.7% of sales.

Outlook and valuations: Positive; maintain ‘BUY’

SSL is one of the best run retail companies and envisaged to reap benefits of its expansion

strategy. We expect SSS growth to be aided by normal monsoon and improvement in

discretionary spends led by implementation of OROP and Seventh Pay Commission coupled

with direct benefit transfers. The company has maintained momentum in its retail space

expansion even amidst slowdown, which will aid future growth (to open at least 3-4 SSL

departmental stores per annum). SSL’s omni channel strategy to counter online competition

is on track. Space rationalisation in HyperCity, higher fashion mix benefits and better

assortments will help bring back growth in HyperCity (to clock company-level EBITDA break-

even by Q4FY18).

Also, the government’s recent directive (press note 3) is aimed at curbing irrational

discounting by online players. Stress in many online players is a positive for physical

retailers. However, entry of single brand retailers such as H&M, Forever21 and heightening

competitive intensity on acquisition of Myntra by Flipkart will remain key monitorables.

We have valued SSL on EV/sales basis, as it is operating at low profitability (due to losses in

HyperCity and sharp expansion in SSL’s departmental stores), which does not reflect

inherent profitability of current business (thus, EV/EBITDA or P/E valuations are not fair).

Retail


We maintain 0.9x EV/sales target multiple to SSL’s departmental business and 0.4x for

HyperCity, and peg our target price at INR429. We maintain ‘BUY/SP’.

Table 1: Target price

Source: Edelweiss research

FY19E

Methodology Target multiple

Per share

contribution

Shoppers stop Sales 48,212 EV/Sales 0.9x 43,391

Hypercity (51%) Sales 6,421 P/S 0.4x 2,569

EV (INR mn) 45,960

less debt (INR mn) 12,118

add: cash + investments (INR mn) 1,932

Net cash (INR mn) 35,774

No of shares (mn) 83

Value of share (INR) 429

Shoppers Stop


Financial snapshot (INR mn) Year to March Q1FY18 Q1FY17 % change Q4FY17 % change FY17 FY18E FY19E

Net revenues 9,411 8,210 14.6 9,103 3.4 49,101 57,894 62,708 Raw material costs 6,000 5,223 14.9 5,736 4.6 31,892 37,427 39,503

Employee expenses 720 644 11.7 711 1.2 3,886 4,342 4,703

Lease charges 874 803 8.8 859 1.8 4,285 5,037 5,456

Other expenses 1,516 1,303 16.3 1,272 19.2 7,296 8,453 9,030

Total expenditure 9,110 7,974 14.2 8,577 6.2 47,359 55,259 58,692

EBITDA 301 237 27.1 525 (42.7) 1,743 2,636 4,016

Depreciation 282 372 (24.3) 247 14.0 1,510 1,681 1,935

EBIT 19 (136) (113.8) 278 (93.3) 233 954 2,081

Other income 54 74 (27.7) 58 (7.5) 251 250 300

Interest 134 159 (15.6) 132 1.2 874 1,100 1,200

Add: Prior period items

Add: Exceptional items (478) (100.0) (128)

Profit before tax (62) (220) NA (274) NA (518) 104 1,181

Provision for taxes (24) (85) NA 86 NA 203 279 470

Minority interest (415) (655) (302)

Associate profit share (63) (80) (80)

Reported net profit (37) (136) NA (361) NA (369) 400 933

Adjusted Profit (37) (136) NA 117 NA (241) 400 933

Diluted shares (mn) 84 84 84 83 83 83

Adjusted Diluted EPS (0.4) (1.6) NA 1.4 NA (2.9) 4.8 11.2

Diluted P/E (x) - - - (120.9) 72.7 31.2

ROAE (%) - - - (13.1) (5.5) 13.7

Purchases (% of revenue) 63.8 63.6 63.0 65.0 64.6 63.0

Employee cost 7.6 7.8 7.8 7.9 7.5 7.5

Lease charges 9.3 9.8 9.4 8.7 8.7 8.7

Other expenses as % of net revenues 16.1 15.9 14.0 14.9 14.6 14.4

EBITDA 3.2 2.9 5.8 3.5 4.6 6.4

Reported net profit (0.4) (1.7) 1.3 (1.3) (0.4) 1.0

Retail


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 5mn 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.


Shoppers Stop

Financial Statements

Income statement (INR mn)

Year to March FY16 FY17 FY18E FY19E

Net revenue 44,320 49,101 57,894 62,708

Materials costs 28,632 31,892 37,427 39,503

Gross profit 15,687 17,210 20,467 23,205

Employee costs 3,330 3,886 4,342 4,703

Electricity expenses 1,210 1,228 1,505 1,568

Rent and lease expenses 4,227 4,285 5,037 5,456

Other Expenses 3,983 4,890 5,558 5,957

Ad. & sales costs 1,146 1,178 1,389 1,505

Total operating expenses 13,897 15,467 17,831 19,189

EBITDA 1,791 1,743 2,636 4,016

Depreciation 1,297 1,510 1,681 1,935

EBIT 494 233 954 2,081

Add: Other income 259.72 250.63 250.00 300.00

Less: Interest Expense 848 874 1,100 1,200

Add: Exceptional items - (128) - -

Profit Before Tax (95) (518) 104 1,181

Less: Provision for Tax 334 203 279 470

Less: Minority Interest (428) (415) (655) (302)

Associate profit share 25 (63) (80) (80)

Reported Profit 26 (369) 400 933

Exceptional Items - (128) - -

Adjusted Profit 26 (241) 400 933

Shares o /s (mn) 83 83 83 83

Diluted shares o/s (mn) 83 83 83 83

Adjusted Diluted EPS 0.3 (2.9) 4.8 11.2

Dividend per share (DPS) 0.8 (1.1) 1.4 3.4

Dividend Payout Ratio(%) 244.7 25.0 30.0 30.0

Common size metrics


Film exhibtion cost 64.6 65.0 64.6 63.0

Rent and lease expenses 9.5 8.7 8.7 8.7

Staff costs 7.5 7.9 7.5 7.5

S G & A expenses 9.0 10.0 9.6 9.5

EBITDA margins 4.0 3.5 4.6 6.4

Net Profit margins (0.9) (1.3) (0.4) 1.0

Growth ratios (%)


Revenues 3.4 10.8 17.9 8.3

EBITDA (33.2) (2.7) 51.2 52.4

Adjusted Profit (94.0) (1,041.5) 266.2 133.0

EPS (94.0) (1,041.5) 266.2 133.0

Key Assumptions


Macro

GDP(Y-o-Y %) 7.2 6.5 7.1 7.7

Inflation (Avg) 4.9 4.5 4.0 4.5

Repo rate (exit rate) 6.8 6.3 5.8 5.8

USD/INR (Avg) 65.0 67.5 66.0 66.0

Company

Revenue growth (Y-o-Y %)

SS-deptstore-Totalstores 77 80 85 89

SS depstore-New addition 5 4 5 4

SS - SSS growth (%) 8.5 3.1 7.0 8.0

HyperCity gross sales growth (%) 2.9 15.5 8.0 8.5

EBITDA margin (%)

Shoppers-COGS (% of rev) 64.2 64.8 64.2 64.0

HyperCity COGS as % of sales 76.0 73.7 79.0 73.4

Staff costs (% of rev) 7.0 7.5 7.5 7.5

A&P as % of sales 2.4 2.4 2.4 2.4

Electricity (% of rev) 2.5 2.5 2.6 2.5

Rent costs (% of rev) 8.9 8.3 8.7 8.7

Financial assumptions

Tax rate (%) 41.7 41.8 42.0 42.0

Capex (INR mn) (4,163) 621 2,273 1,930

Debtor days 6 4 4 4

Inventory days 63 62 62 62

Payable days 56 52 52 52

Dep. (% gross block) 18.6 20.3 10.2 10.2


Retail

Peer comparison valuation

Market cap EV / EBITDA (X) EV / Sales (X) ROAE (%)

Name (USD mn) FY18E FY19E FY18E FY19E FY18E FY19E

Shoppers Stop 458 14.7 9.6 0.7 0.6 (5.5) 13.7

Aditya Birla Fashion and Retail Ltd 2,073 25.4 17.8 2.0 1.7 14.6 25.0

Jubilant Foodworks 1,354 23.3 18.9 2.9 2.5 15.9 18.7

Titan Company 7,525 32.0 25.0 3.1 2.6 23.5 25.3

Wonderla Holidays 310 17.6 12.1 6.4 5.5 12.6 16.5

Source: Edelweiss research

Cash flow metrics


Operating cash flow 1,424 1,387 2,164 3,441

Investing cash flow (1,763) (180) (2,023) (1,630)

Financing cash flow 276 (230) 1,046 (1,036)

Net cash Flow (63) 978 1,188 775

Capex 4,163 (621) (2,273) (1,930)

Dividend paid (63) 92 (120) (280)

Profitability and efficiency ratios


ROAE (%) (7.5) (13.1) (5.5) 13.7

ROACE (%) 5.6 3.4 8.0 14.5

Inventory Days 63 62 62 62

Debtors Days 6 4 4 4

Payable Days 56 52 52 52

Cash Conversion Cycle 13 13 13 13

Current Ratio 1.6 1.7 1.8 1.9

Gross Debt/EBITDA 4.9 5.4 4.4 3.0

Gross Debt/Equity 1.7 1.9 2.6 2.6

Adjusted Debt/Equity 1.7 1.9 2.6 2.6

Interest Coverage Ratio 0.6 0.3 0.9 1.7

Operating ratios


Total Asset Turnover 3.3 3.5 3.8 3.8

Fixed Asset Turnover 4.9 5.3 6.2 6.7

Equity Turnover 8.3 9.8 12.5 13.7

Valuation parameters


Adj. Diluted EPS (INR) 0.3 (2.9) 4.8 11.2

Y-o-Y growth (%) (94.0) (1,041.5) 266.2 133.0

Adjusted Cash EPS (INR) 15.8 15.2 24.9 34.4

Diluted P/E (x) 1,138.0 (120.9) 72.7 31.2

P/B (x) 5.7 6.1 5.8 5.2

EV / Sales (x) 0.9 0.8 0.7 0.6

EV / EBITDA (x) 21.1 22.0 14.7 9.6

Dividend Yield (%) 0.2 (0.3) 0.4 1.0

Balance sheet (INR mn)

As on 31st March FY16 FY17 FY18E FY19E

Share capital 417 418 418 418

Reserves & Surplus 4,734 4,375 4,631 5,228

Shareholders' funds 5,151 4,792 5,048 5,645

Minority Interest (12) 52 (603) (905)

Short term borrowings 4,214 5,618 5,618 5,618

Long term borrowings 4,581 3,710 6,000 6,500

Total Borrowings 8,795 9,327 11,618 12,118

Def. Tax Liability (net) (36) (43) (43) (43)

Sources of funds 13,898 14,129 16,020 16,815

Gross Block 8,220 8,766 10,266 11,766

Net Block 7,495 7,597 7,557 7,304

Capital work in progress 321 147 520 550

Intangible Assets 1,586 1,680 1,886 2,104

Total Fixed Assets 9,403 9,425 9,964 9,958

Non current investments 390 199 199 199

Cash and Equivalents 104 76 1,237 1,932

Inventories 5,792 5,776 6,699 7,062

Sundry Debtors 519 568 634 686

Loans & Advances 2,737 3,136 3,136 3,136

Other Current Assets 1,338 1,342 1,342 1,342

Current Assets (ex cash) 10,386 10,822 11,811 12,226

Trade payable 4,944 4,908 5,705 6,015

Other Current Liab 1,440 1,485 1,485 1,485

Total Current Liab 6,384 6,393 7,190 7,500

Net Curr Assets-ex cash 4,002 4,429 4,621 4,727

Uses of funds 13,898 14,129 16,020 16,815

BVPS (INR) 61.7 57.4 60.5 67.6

Free cash flow (INR mn)


Reported Profit 26 (369) 400 933

Add: Depreciation 1,297 1,510 1,681 1,935

Interest (Net of Tax) - - 737 804

Others (391) 271 (462) (126)

Less: Changes in WC (493) 24 192 105

Operating cash flow 1,424 1,387 2,164 3,441

Less: Capex (4,163) 621 2,273 1,930

Free Cash Flow 5,587 766 (109) 1,511


Shoppers Stop

Top 10 holdings

Perc. Holding Perc. Holding

Cape Trading Pvt Ltd 12.44 Anbee Construction Pvt Ltd 12.44

Reliance Capital Trustee Co Ltd 9.31 Capstan Trading Pvt Ltd 6.54

Casa Maria Properties Pvt 6.29 Icici Prudential Life Insurance 4.45

Birla Sun Life Asset Management 4.08 Miraj Marketing Pvt Ltd 2.76

Zodiac Clothing Company 1.69 Lombard Odier & Cie 1.59

*as per last available data

Insider Trades

Reporting Data Acquired / Seller B/S Qty Traded

07 Apr 2017 Casa Maria Properties LLP Sell 2660000.00

07 Apr 2017 Cape Trading LLP Buy 4125361.00

07 Apr 2017 Raghukool Estate Development LLP Sell 2670000.00

07 Apr 2017 Capstan Trading LLP Sell 2670000.00

07 Apr 2017 Anbee Constructions LLP Buy 3874639.00

*in last one year

Bulk Deals Data Acquired / Seller B/S Qty Traded Price

31 Mar 2017 Raghukool Estate Developement Llp Sell 2670000 360.00

31 Mar 2017 Casa Maria Properties Llp Sell 2660000 360.00

31 Mar 2017 Anbee Constructions Llp Buy 3874639 360.00

31 Mar 2017 Capstan Trading Llp Sell 2670000 360.00

31 Mar 2017 Cape Trading Llp Buy 4125361 360.00

*in last one year

Additional Data

Directors Data Chandru L. Raheja Chairman B. S. Nagesh Vice Chairman

Ravi C. Raheja Non Executive Director Neel C.Raheja Non Executive Director

Nitin J. Sanghavi Director Deepak Ghaisas Director

Nirvik Singh Director Gulu L. Mirchandani Director

Shahzaad Dalal Director

Auditors - Deloitte Haskins & Sells, Mumbai

*as per last annual report


Company Absolute

reco

Relative

reco

Relative

risk

Company Absolute

reco

Relative

reco

Relative

Risk

Aditya Birla Fashion and Retail Ltd BUY SO L Future Retail HOLD SU H

Jubilant Foodworks HOLD SP M Shoppers Stop BUY SP L

Titan Company BUY SO L Wonderla Holidays BUY SP M

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


Shoppers Stop

Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.

Board: (91-22) 4009 4400, Email: [email protected]

Aditya Narain

Head of Research

[email protected]

Coverage group(s) of stocks by primary analyst(s): Retail

Aditya Birla Fashion and Retail Ltd, Future Retail, Jubilant Foodworks, Shoppers Stop, Titan Company, Wonderla Holidays

Distribution of Ratings / Market Cap

Edelweiss Research Coverage Universe

Rating Distribution* 161 67 11 240 * 1stocks under review

Market Cap (INR) 156 62 11

Date Company Title Price (INR) Recos

Recent Research

27-Jul-17 Aditya Birla Fashion and

Retail

Early sale season boost; margin shines; Result Update

170 Buy

21-Jul-17 Future Retail

In pole position; Initiating Coverage

394 Buy

19-Jul-17 Dollar Industries

The right fit; Visit Note

2,230 Not Rated

> 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

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Shoppers' Stop


Retail

DISCLAIMER

Edelweiss Securities Limited (“ESL” or “Research Entity”) is regulated by the Securities and Exchange Board of India (“SEBI”) and is licensed to carry on the business of broking, depository services and related activities. The business of ESL and its Associates (list available on www.edelweissfin.com) are organized around five broad business groups – Credit including Housing and SME Finance, Commodities, Financial Markets, Asset Management and Life Insurance.

This Report has been prepared by Edelweiss Securities Limited in the capacity of a Research Analyst having SEBI Registration No.INH200000121 and distributed as per SEBI (Research Analysts) Regulations 2014. This report does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 includes Financial Instruments and Currency Derivatives. The information contained herein is from publicly available data or other sources believed to be reliable. This report is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this report should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in Securities referred to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. The investment discussed or views expressed may not be suitable for all investors.

This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ESL and associates / group companies to any registration or licensing requirements within such jurisdiction. The distribution of this report in certain jurisdictions may be restricted by law, and persons in whose possession this report comes, should observe, any such restrictions. The information given in this report is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without any prior notice. ESL reserves the right to make modifications and alterations to this statement as may be required from time to time. ESL or any of its associates / group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. ESL is committed to providing independent and transparent recommendation to its clients. Neither ESL nor any of its associates, group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including loss of revenue or lost profits that may arise from or in connection with the use of the information. Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. Past performance is not necessarily a guide to future performance .The disclosures of interest statements incorporated in this report are provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. The information provided in these reports remains, unless otherwise stated, the copyright of ESL. All layout, design, original artwork, concepts and other Intellectual Properties, remains the property and copyright of ESL and may not be used in any form or for any purpose whatsoever by any party without the express written permission of the copyright holders.

ESL shall not be liable for any delay or any other interruption which may occur in presenting the data due to any reason including network (Internet) reasons or snags in the system, break down of the system or any other equipment, server breakdown, maintenance shutdown, breakdown of communication services or inability of the ESL to present the data. In no event shall ESL be liable for any damages, including without limitation direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with the data presented by the ESL through this report.

We offer our research services to clients as well as our prospects. Though this report is disseminated to all the customers simultaneously, not all customers may receive this report at the same time. We will not treat recipients as customers by virtue of their receiving this report.

ESL and its associates, officer, directors, and employees, research analyst (including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the Securities, mentioned herein or (b) be engaged in any other transaction involving such Securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company/company(ies) discussed herein or act as advisor or lender/borrower to such company(ies) or have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public appearance. ESL may have proprietary long/short position in the above mentioned scrip(s) and therefore should be considered as interested. The views provided herein are general in nature and do not consider risk appetite or investment objective of any particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business with ESL.


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ESL or its associates may have received compensation from the subject company in the past 12 months. ESL or its associates may have managed or co-managed public offering of securities for the subject company in the past 12 months. ESL or its associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report. Research analyst or his/her relative or ESL’s associates may have financial interest in the subject company. ESL and/or its Group Companies, their Directors, affiliates and/or employees may have interests/ positions, financial or otherwise in the Securities/Currencies and other investment products mentioned in this report. ESL, its associates, research analyst and his/her relative may have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public appearance.

Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i) exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed exchange controls which could affect the value of the currency. Investors in securities such as ADRs and Currency Derivatives, whose values are affected by the currency of an underlying security, effectively assume currency risk.

Research analyst has served as an officer, director or employee of subject Company: No

ESL has financial interest in the subject companies: No

ESL’s Associates may have actual / beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report.

Research analyst or his/her relative has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No

ESL has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No

Subject company may have been client during twelve months preceding the date of distribution of the research report.

There were no instances of non-compliance by ESL on any matter related to the capital markets, resulting in significant and material disciplinary action during the last three years except that ESL had submitted an offer of settlement with Securities and Exchange commission, USA (SEC) and the same has been accepted by SEC without admitting or denying the findings in relation to their charges of non registration as a broker dealer.

A graph of daily closing prices of the securities is also available at www.nseindia.com

Analyst Certification:

The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.

Additional Disclaimers

Disclaimer for U.S. Persons

This research report is a product of Edelweiss Securities Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.

This report is intended for distribution by Edelweiss Securities Limited only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor.


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In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Edelweiss Securities Limited has entered into an agreement with a U.S. registered broker-dealer, Edelweiss Financial Services Inc. ("EFSI"). Transactions in securities discussed in this research report should be effected through Edelweiss Financial Services Inc. Disclaimer for U.K. Persons

The contents of this research report have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA"). In the United Kingdom, this research report is being distributed only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the “Order”); (b) persons falling within Article 49(2)(a) to (d) of the Order (including high net worth companies and unincorporated associations); and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). This research report must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this research report relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this research report or any of its contents. This research report must not be distributed, published, reproduced or disclosed (in whole or in part) by recipients to any other person. Disclaimer for Canadian Persons

This research report is a product of Edelweiss Securities Limited ("ESL"), which is the employer of the research analysts who have prepared the research report. The research analysts preparing the research report are resident outside the Canada and are not associated persons of any Canadian registered adviser and/or dealer and, therefore, the analysts are not subject to supervision by a Canadian registered adviser and/or dealer, and are not required to satisfy the regulatory licensing requirements of the Ontario Securities Commission, other Canadian provincial securities regulators, the Investment Industry Regulatory Organization of Canada and are not required to otherwise comply with Canadian rules or regulations regarding, among other things, the research analysts' business or relationship with a subject company or trading of securities by a research analyst. This report is intended for distribution by ESL only to "Permitted Clients" (as defined in National Instrument 31-103 ("NI 31-103")) who are resident in the Province of Ontario, Canada (an "Ontario Permitted Client"). If the recipient of this report is not an Ontario Permitted Client, as specified above, then the recipient should not act upon this report and should return the report to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any Canadian person. ESL is relying on an exemption from the adviser and/or dealer registration requirements under NI 31-103 available to certain international advisers and/or dealers. Please be advised that (i) ESL is not registered in the Province of Ontario to trade in securities nor is it registered in the Province of Ontario to provide advice with respect to securities; (ii) ESL's head office or principal place of business is located in India; (iii) all or substantially all of ESL's assets may be situated outside of Canada; (iv) there may be difficulty enforcing legal rights against ESL because of the above; and (v) the name and address of the ESL's agent for service of process in the Province of Ontario is: Bamac Services Inc., 181 Bay Street, Suite 2100, Toronto, Ontario M5J 2T3 Canada. Disclaimer for Singapore Persons

In Singapore, this report is being distributed by Edelweiss Investment Advisors Private Limited ("EIAPL") (Co. Reg. No. 201016306H) which is a holder of a capital markets services license and an exempt financial adviser in Singapore and (ii) solely to persons who qualify as "institutional investors" or "accredited investors" as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore ("the SFA"). Pursuant to regulations 33, 34, 35 and 36 of the Financial Advisers Regulations ("FAR"), sections 25, 27 and 36 of the Financial Advisers Act, Chapter 110 of Singapore shall not apply to EIAPL when providing any financial advisory services to an accredited investor (as defined in regulation 36 of the FAR. Persons in Singapore should contact EIAPL in respect of any matter arising from, or in connection with this publication/communication. This report is not suitable for private investors.

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