Shares in Indian retailer Shoppers Stop rose almost 9% to a three-year high on Friday, a day after it agreed to sell its supermarket chain Hypercity to domestic rival Future Retail for ₹655 crore.
It ended the day 1.19% higher on the BSE at ₹513.20. The deal also sent shares of Future Retail sharply higher (5.9%), as investors bet it would improve its growth prospects as Indian shoppers increasingly switch from buying groceries at mom-and-pop stores to bigger supermarkets such as Hypercity. The firms had earlier said Future Retail was buying 100% in Hypercity, in which Shoppers Stop’s owns 51.09%.
Analysts said the deal would allow Shoppers Stop to focus on its core department store business and cut debt levels, while Future Retail, which operates the Big Bazaar chain, will be able to expand its store count in the country to more than 900.
“We believe Shoppers Stop Ltd is in a sweet spot,” said Edelweiss in a note to clients.
