Shoppers Stop is looking to raise funds for its retailing format under the HyperCITY banner.
The management will be targeting between Rs 150 crore and Rs 200 crore in equity and has initiated discussions with potential investors in the business.
The company is hopeful of closing the deal in another four to six months though the management is targeting to raise the funds by March 2017.
According to Sanjay Chakravarti, customer care associate and chief financial officer, Shoppers Stop Ltd, the company is looking at raising funds in the HyperCITY business.
“We are looking at the equity option and funds coming in directly into the HyperCITY balance-sheet. We believe it will take another six months before we can bring in funds,” said Chakravarti during an earnings call.
On whether the company will look at stake sale in the HyperCITY business or any other option, Chakravarti said, the management is yet to take a decision on that.
“It’s something we are open to. While it’s still very early days, what we are very clear about is that the money has to come into the balance-sheet of HyperCITY,” he said.
Elaborating on the performance of HyperCITY business, Chakravarti said the vertical has shown a reasonably good sequential growth.
“We’d closed the first quarter at a negative 0.5% like-to-like growth, which has now converted into a 3.4% like-to-like growth. This is essentially on account of all the steps been taken in the last two years that have actually started delivering results,” he said.
While overall sales growth was around 15%, the share of fashion has increased from 15.4% to 16.1% and the net margin was up by 100 basis points.
The hyper format’s gross margin stood at 22.8% and profit after tax was Rs 17.26 crore, which included a profit of Rs 10.36 crore from the sale of one property option.
While one new HyperCITY store spread across 25,000 square feet was opened at Orion Mall, Bengaluru, in the September quarter, the format’s expansion will largely depend on how the business performs and how much cash gets generated.
On the expansion plans for HyperCITY, Chakravarti said, “We will make it opportunistic and see how the business performs. We believe that the business is going to start throwing out cash from next year. So depending on what kind of cash comes in, what kind of capital we can raise, we will decide on what kind of expansion we want to do in that business.”
The Shoppers Stop management is hoping the HyperCITY business to breakeven at Ebitda level next year and pretax profit level the year after. The company currently operates 20 HyperCITY outlets across India occupying 1.4 million square feet of retail space across 11 cities.
