Image Source: CNBCTV18
Shoppers Stop Ltd has taken a significant step in its beauty and wellness expansion strategy by approving the transfer of 40,000 Optionally Convertible Debentures (OCDs) worth Rs. 30 million in Pahadi Local, a start-up focused on Himalayan skincare and wellness products. This move signals Shoppers Stop’s deeper foray into the fast-growing natural skincare segment aligned with its vision to become the most loved beauty shopping destination for customers.
Key Highlights of the Investment and Transfer Deal
The Board of Directors of Shoppers Stop Ltd approved the investment by subscribing to 40,000 OCDs of Pahadi Local at Rs. 1,000 each, totaling Rs. 40 million.
The transfer or subscription value mentioned in the current announcement stands at Rs. 30 million (3 crore rupees).
Upon achieving performance KPIs by June 2025, these OCDs will convert into equity giving Shoppers Stop 33.33% ownership in Pahadi Local.
There is an option to acquire an additional 17.67% equity in Pahadi Local by June 2025 at a post-money valuation of Rs. 20 crore, potentially elevating ownership to 51%.
If KPIs are not met, OCDs will be redeemed at face value by December 2025.
Pahadi Local operates in the “Clean Beauty” space, offering skincare products sourced from the Himalayas such as oils, powders, pastes, and mists made with natural ingredients, supported by its in-house R&D facility in Himachal Pradesh.
Strategic Importance of the Investment
This investment in Pahadi Local fits cohesively into Shoppers Stop’s strategic priority of strengthening its beauty portfolio, which has shown rapid growth and strong customer traction. The natural and sustainable product line enhances their ESG commitments by promoting MSME and environmentally conscious products. It also enables Shoppers Stop and its subsidiaries to expand distribution of Pahadi Local products, tapping into the booming clean and wellness beauty market that is still in its infancy but growing robustly. Beauty remains a critical pillar for the company’s future growth ambitions.
Financial and Market Context
Shoppers Stop has witnessed an improving operational performance with a recent quarterly revenue growth of 6% and an EBITDA rise of 68%, driven largely by premiumization strategies in apparel and beauty categories. The company continues to leverage its strong loyalty program “First Citizen,” which accounts for 85% of sales. The stock price has been stable with recent trading around Rs. 797 per share, reflecting market confidence in the company’s growth initiatives.
Future Outlook and Potential Impact
Conversion of OCDs into equity by mid-2025 could give Shoppers Stop a substantial minority stake (33.33%) with exit or expansion options.
Majority ownership (51%) could be secured by exercising the additional option, facilitating greater control over Pahadi Local’s business and strategic direction.
Expansion into natural beauty aligns with evolving consumer preferences toward clean, sustainable, and locally sourced wellness products.
The investment is expected to support Shoppers Stop’s market differentiation through premium products and deepen its omni-channel presence in the beauty sector.
In summary, Shoppers Stop Ltd’s approval of the transfer and subscription of OCDs in Pahadi Local underscores its strategic bet on the growing natural skincare segment. This investment not only complements its beauty-led growth strategy but also advances its ESG goals by supporting a homegrown clean beauty start-up rooted in sustainable sourcing from the Himalayan region. The move strengthens Shoppers Stop’s position as a leading beauty retailer ready to capture emerging market trends and enhance shareholder value.
Source: EquityBulls News, Shoppers Stop Ltd Corporate Announcement
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