Shares of Shoppers Stop hit a new 52-week high of Rs 603.70 as the stock surged 11% in intraday trade on Wednesday. The company reported a profit after tax (PAT) of Rs 23 crore in Q1FY23, compared to a loss of Rs 118 crore in the same period last year (Q1FY22) on the back of good operating performance.

The stock surpassed its all-time high of Rs 598.65 set on April 28, 2022. The stock hit an all-time high of Rs 792 on January 4, 2011. Shoppers Stop was trading 10% higher at Rs 595 at 9.29 am, while the S&P BSE Sensex was down 0.1%.

In Q1FY23, the company’s sales rose nearly fivefold to Rs 942 crore compared to Rs 201 crore in the first quarter of fiscal 2022. Despite a 10-day delay in end-of-season promotions, Shoppers Stop continued its momentum from March 2022, recording strong quarterly results as the industry witnessed its first non-disruptive quarter in two years.

Gross margin increased by 210 basis points sequentially (up 350 basis points year over year) to 42.2%. The reported earnings before interest, tax, depreciation and amortisation (Ebitda) margin was 17.2% compared to -31.2% in Q1FY22. Ebitda’s margin in Q1FY20 was 16.6%.

The company expects strong demand growth in second-tier cities and beyond as smartphone penetration increases and digital payment systems become more commonplace. The company plans to open new stores mainly in second and third-tier cities and maintain investment in store decoration during the year.

Looking ahead, Shoppers Stop expects FY23 to be one of the strongest years for the retail sector. “Returning liquidity and higher ticket purchases, led by pent-up demand, are likely to drive retail spending in the coming months. Hybrid work culture and festive seasons will provide excellent results for categories such as beauty, formal wear and Indian apparel. growth opportunities,” the company said.

“Shoppers Stop’s liquidity position remains fairly stable with cash and investments worth Rs 183 crore and debt worth Rs 175 crore (net surplus of Rs 8 crore, D/E: 0.3x). We expect that a healthy store growth channel and interest in Continued investment in omnichannel will further improve future revenue trajectory. Despite recent share price gains, Shoppers Stop continues to trade at a reasonable valuation (~1.7x EV/FY24 sales),” ICICI Securities said in a note.