V-Mart Retail Ltd. share price target

In view of the healthy Q2 performance we revise our store opening estimates for FY22/23/24 with improvement in profitability thus leading to an upward revision in our estimates and rating to BUY (HOLD earlier) and revised TP of Rs. 4,750 (Rs. 3,685 earlier).

VMART saw a resurgence in growth, with 12 store additions and 93% YoY jump in revenue, 8% above pre-COVID levels (2QFY20). Excluding onemonth revenue from the recently acquired Unlimited' stores, it reached pre-COVID levels. LTL stood at 90%. It reported an operating (pre Ind AS 116)/net loss of INR57m/INR141m. Recent acquisition of the Unlimited Value Retail chain and aggressive store additions in its core markets should drive steady growth (FY23E PAT revised upward to 25% on incorporating Unlimited stores in our estimates), which can be well supported by a lean Balance Sheet, backed by a recent QIP. We factor...

We remain positive on the stock from a long-term perspective in light of its immense growth potential. At CMP, the stock trades at 16x FY24E EV/EBITDA, and we assign a target multiple of 18x FY24E EBITDA to arrive at TP of Rs 3,685/share, implying an upside potential of 6% from CMP.

V-Mart follows a cluster based approach of adding stores within a radius of 50-100 km. This gives it better economies of scales, supply chain efficiencies and better understanding of fashion needs of the specific region...

V-Mart follows a cluster based approach of adding stores within a radius of 50-100 km. This gives it better economies of scales, supply chain efficiencies and better understanding of fashion needs of the specific region The company, over the last two years, has expanded its reach in the interior parts of the country by opening stores in tier IV cities (~12% of total stores) Conference call highlights: We attended the V-Mart conference call with regard to its acquisition of Unlimited' store brand from Arvind Fashions. The key highlights...

Despite a soft base, V-Mart Retail (VMART) reported weak 6% YoY Q4FY21 revenue growth due to sustained Covid-19 headwinds.

we assign a target multiple of 18x FY23E EBITDA to arrive at TP of Rs 3,050/share implying an upside potential of 10% from CMP.

V-Mart is always believed to possess the first mover advantage having built a robust store network with immense experience (~18 years) in tier II/III cities. The company has 274 stores of which 78% are in non-tier 1 cites. VMart follows a cluster based approach of adding stores within a radius of 50100 km. This gives it better economies of scales, supply chain efficiencies and better understanding of fashion needs of the specific region. The company, in the last two years, has further expanded its reach in the interior parts of the country by opening stores in tier IV cities (~12% of total stores). The markets in the non-tier 1 cities are largely penetrated by regional and unorganised players. Hence, we believe there lies an immense opportunity...

We initiate coverage on V-Mart Retail Limited (V-MART) with a BUY recommendation and a Target Price of Rs 3,400, implying a 24% upside from the current levels.