On the trading day, Shoppers Stop's share price declined by 1.02%, underperforming the diversified retail sector by 1.62%. This marks the third consecutive day of losses for the stock, which has cumulatively fallen by 3.44% over this period. The current price of Rs.443.3 stands well below its 52-week high of Rs.688, highlighting the extent of the recent correction.
Technical indicators show that Shoppers Stop is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This positioning suggests a persistent bearish momentum in the stock's price action over multiple time frames.
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In contrast to Shoppers Stop's performance, the broader market has shown resilience. The Sensex opened flat but moved into positive territory, trading at 84,753.71 points, a 0.1% gain. The index remains close to its 52-week high of 85,290.06, just 0.63% away, supported by mega-cap stocks leading the gains. The Sensex is also positioned above its 50-day moving average, which itself is above the 200-day moving average, indicating a bullish trend in the broader market.
Over the past year, Shoppers Stop's stock has generated a return of -28.59%, significantly lagging the Sensex's 9.23% gain over the same period. This underperformance extends beyond the last year, with the stock consistently trailing the BSE500 index in each of the last three annual periods.
Financially, Shoppers Stop exhibits a high debt burden, with a debt-to-equity ratio averaging 36.93 times and a long-term debt-to-equity ratio of 11.51 times. The half-yearly debt-to-equity ratio stands at 30.43 times, indicating substantial leverage. This elevated debt level contributes to a weaker long-term fundamental strength assessment for the company.
The company has reported negative net profits for three consecutive quarters. The most recent quarterly profit after tax (PAT) was Rs. -20.11 crores, representing a decline of 549.6% compared to the previous four-quarter average. Additionally, the debtors turnover ratio for the half-year period is at a low 5.44 times, suggesting slower collection efficiency.
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Despite these challenges, Shoppers Stop's return on capital employed (ROCE) is recorded at 6.6%, and the enterprise value to capital employed ratio stands at 2.3. These metrics indicate a valuation that is comparatively attractive relative to its peers' historical averages. However, the stock's profits have declined by 18.4% over the past year, aligning with the negative return trend.
Institutional investors hold a significant stake in Shoppers Stop, accounting for 28.51% of the shareholding. These investors typically possess greater resources and analytical capabilities to assess company fundamentals, which may influence the stock's market dynamics.
In summary, Shoppers Stop's fall to a 52-week low of Rs.443.3 reflects a combination of sustained price weakness, high leverage, and consecutive quarterly losses. While the broader market and sector have shown relative strength, the stock's financial metrics and price trends highlight ongoing pressures within the company’s performance and valuation.
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