V-Mart Retail Ltd. share price target

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.

While the third quarter is typically its best season, V-Mart Retail (VMART) reported a Q3FY21 revenue decline of 16% YoY to Rs 4.7bn due to continued Covid-19 headwinds.

We present key takeaways from our recent interaction with the V-Mart Retail management (VMART).

High Valuations Despite Increased Rural Demand and Market Share Gain Possibilities: Footfalls continue to be low as the textile industry continues to witness selectivespecific purchases based on needs in the current economic scenario.

We interacted with the V-Mart management to gain the latest insights on the developments and recovery in the Retail Apparel market. Here are the key highlights: Revenue recovery and a rise in footfall in lower tier cities have been better v/s metro cities. Thus, recovery in value retailers such as V-Mart is better v/s urbancentric retailers. We understand sales during the festive season were lower by ~20% YoY on an LTL...