Shopper Stop Rights issue review - (May apply)

•    SSL is a part of the K Raheja group that has diverse businesses.
•    The company is an organized retailer in fashion and luxuries.
•    It suffered a severe setback in last three quarters due to pandemic.
•    Issue is priced at a discount to the ongoing market price.


ABOUT COMPANY:
Shoppers Stop Ltd.  (SSL) is a part of the K Raheja group and is engaged in the organized retailing business. It currently markets ready to wear fashion wears for men, women and children and also selling cosmetics, perfumes and accessories. As on September 30, 2020, it had 85 shoppers stop stores (including 74 mall stores and 11 standalone stores), 11 Home Stop stores, 131 beauty stores, 27 airport doors and 33 crossroad stores.

SSL retails a range of branded and private label apparels, footwear, perfumes, cosmetics, jewelleries, leather products and accessories and home products. It is also having a number of speciality stores selling books and beauty products from marquee brands. SSL has also launched 2 multi-brand luxury beauty stores called 'Arcelia'. All these stores are located in over 44 cities across India covering tier II and tier III cities. It also has 4 distribution centers. Over the periods, it also went online from indoor shopping and has also become a strategic seller on Amazon marketplace. SSL's omnichannel retailing contributed to more than 1.7% of sales in FY20 and over 9.3% of sales in H1 of FY21. It has 7.4 million members as on September 30, 2020, under its 'First Citizen' loyalty programme.

ISSUE DETAILS/CAPITAL STATUS:
To part finance its plans for repayment/prepayment of certain working capital borrowings (Rs. 125 cr.), Working capital needs (Rs. 100 cr.), general corpus fund needs (Rs. 70.83 cr., SSL is coming out with a rights issue of 21368982 equity shares of Rs. 5 each at a fixed price of Rs. 140 per share. The company mulls raising Rs. 299.17 cr. from this issue. It opens for subscription on November 27, 2020, and will close on December 11, 2020. Post allotment, shares will be listed on BSE and NSE. The company is offering 17 rights shares for every 70 shares held by the shareholders as on record date of November 20, 2020. SSL is spending Rs. 3.34 cr. for this rights issue process.

This issue is jointly lead managed by JM Financial Ltd. and Axis Capital Ltd. KFin Technologies Pvt. Ltd. is the registrar to the issue.

Post rights issue SSL's current paid-up equity capital of Rs. 44 cr. will stand enhanced to Rs. 54.68 cr. The company mulls market capitalization of Rs. 1531.03 cr. based on rights issue pricing.

FINANCIAL PERFORMANCE:
On the financial performance front, on a consolidated basis, for the last two fiscals, SSL has reported a total income of Rs. 3596.58 cr. / Rs. 64.97 cr. (FY19) and Rs. 3498.11 cr. / Rs.  - (142.02) cr. (FY20). Following COVID-19 pandemic it suffered a severe setback for H1 of FY21 with a loss of Rs. - (217.95) cr. on a total income of Rs. 522.05 cr. (as per unaudited statements for the period ended September 30, 2020).


SHARE PRICE MOVEMENTS:
Share of SSL is listed on BSE (Code 532638) and NSE (Symbol SHOPERSTOP). It turned ex-right on November 19, 2020. It last quoted cum-right at Rs. 192.60 at the close on November 18, 2020. It opened ex-right at Rs. 183.0 on 19.11.20 and has marked high/low of Rs. 192.00/Rs. 180.00 with the close of Rs.  180.80 on November 24, 2020. The closing price of November 24, 2020, indicates a market cap of Rs. 1977.76 cr. The scrip has posted 52 weeks high/low of Rs. 422.93/ Rs. 124.39. (All price movements are based on BSE Website data)