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Target: ₹870
CMP: ₹712.70
Buoyant demand amid record weddings and travel recovery implied revenue came in at ₹530 crore (1.2x 3QFY20), in line with our estimate. Increased share of value segment (38 per cent in Q3-FY23 vs 27 per cent in Q3-FY20) and lagged benefit of RM moderation implied GM at 49.4 per cent came below expectation (Ambit: 50.5 per cent).
Resultantly, EBITDAM was 6 per cent below estimate. The management remains on track to reach >500 EBOs by FY23-end and maintained capex guidance at ₹100 crore for FY23. With nearly 75 per cent of BigBazaar stores operational as Smart Bazaar stores, the management expects good momentum in MT channel, going forward.
Further, it remains focused on growing the Caprese brand. With in-line growth but lagged margin improvement, we marginally trim our FY23 margin estimates while marginally increasing our FY24 EPS estimate amid lower ETR.
We remain structurally bullish on the long growth runway for organised luggage players given GST-led tailwinds, change in consumer behaviour from owning bags per household to owning multiple bags per person and increase in marriage expenditure
Consequently, our one-year DCF-based TP increases to ₹870 (₹860 earlier), implying 42x one-year forward P/E. Remain Buy given favourable long-term industry tailwinds.
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