V-Mart Retail Ltd. share price target

Healthy revenue growth but margins shrink in a weak market: Revenue grew 25% YoY to INR4.5b (8% beat), led by rapid store addition (+13 to 227) and high SSSG of 5.2% YoY (our estimate: +4.5%). That said, we note that the market environment was not very conducive, with higher RM cost (+31% YoY due to intense competition), contained product pricing and various promotional offers impacting the gross margin by 300bp. On a pre-Ind-AS 116 basis, EBITDA declined 9% YoY to INR393m (at INR578m on a post IndAs 116 basis), with the margin contracting sharply by 330bp YoY to 8.7%....

Mart posted a modest topline growth of 15.9% (yoy) last quarter, supported by same store sales growth of 4% and launch of 15 new stores. It has continued its focus on fashion, which constituted ~93% of Q4FY19 sales.. Although average selling price of apparel stood at Rs 334/$4.7 in Q4FY19 vs Rs 321/$5.0 in Q4FY18 (Rs 320/$4.6 for FY19 compared to Rs 323/$5.0 a year before), total average verage selling price remained flat yoy last...

Margins Drive Down Performance: Despite top line growth of 16%, margins were impacted on account of higher operating costs and increasing competition.

V-Mart Retail (VMART) reported below-expected Q4FY19 revenue growth of 16% YoY to Rs 3.4bn, with SSSg of 3.5%. Operating margins contracted 260bps YoY to 15.7%, resulting in EBITDA/PBT dropping 23%/29% YoY. Management has guided for ~25% area addition and operating margins of 9-9.5% in FY20. We scale back FY20/FY21 PAT estimates by 9%/3% given the muted margin guidance. Upon rollover to Mar'20, our target price...

Store Additions, Rebound in Footfalls Aid Q3FY19 Growth: Aggressive store additions from FY18 onwards and rebound in conversion rate aided in volume growth of 14% and same store sales growth (SSSG) of 11% in Q3FY19 leading to a revenue growth of 27% YoY to Rs. 4658 Mn.

Less number of weddings,, large base effect due to GST and reduction in average selling price of apparel Rs 264 ($3.9) in Q1FY19 vs Rs 269 ($4.2) in Q1FY18- translated to a restrained topline expansion up by 14.6% (yoy) last quarter, with sales per square feet declining by 4.5% (yoy) to Rs 874 ($13.0). Despite promotions, superior branding and wider merchandise, same store sales growth, both in value and volume terms, fell drastically to 1.2% and...

Reaping the First Mover Advantage in Smaller Towns: V-Mart Retail Ltd's top-line for Q1FY19 grew 15% on YoY basis to Rs. 3612 Mn mainly led by volume growth owing to stores addition. The gross margin expanded by 209 bps as a result of lower cost of goods sold and higher full pricesales.

Leading the Value Retail in Smaller Towns: V-Mart Retail's revenue in Q4FY18 grew 18% on YoY basis to Rs. 2974Mn led by stores addition. EBITDA increased by 55% over last year same quarter and stood at Rs. 231 Mn with a margin expansion of 185bps on YoY basis. Same store sales grew by 7% for the quarter on a high base of 34% last year.

Eyeing on Leading the Value-Retailing Segment Nationally: V-Mart ltd registered a 34% increase in EBIDTA for Q3FY18 which was driven majorly by reduction in tax rates (from 7% to 5%), reduction in wastages, reducedoperating expenses and lower advertising and promotional expenses. The company is focused on achieving volume-driven growth.

Despite the average selling price remaining flat Rs 182 ($2.8) in Q2FY18 vs Rs 180.30 ($2.7) in Q2FY17; for apparel it was down by 2.1%2.1% V-Mart recorded a 23.5% (y-o-y) y) rise in its revenues last quarter. This...