ICICI Direct has given Buy recommendation for V-Mart recommended buy rating on the stock with a target price of Rs 3500 in its research with a target price of Rs. 3500 in its research report issued on Jun 01, 2021
ICICI Direct’s research report on V-Mart
V-Mart witnessed a gradual recovery with revenue growth of 6% YoY to Rs 352 crore in Q4FY21. On a normalised base, recovery rate was at ~88% of pre-Covid levels. Lower footfalls (down 12% YoY), were offset by better conversion ratio (61.1% vs. 55% in Q4FY20) and higher transaction size (Rs 851 vs. Rs 790 in Q4FY20). The company had replenished its inventory during the quarter with new summer season wherein full priced sales resulted in gross margins improving 130 bps YoY to 29.8%. Other expenses increased 18% YoY mainly on the back of higher marketing spends in Q4. Subsequently, EBITDA margins improved 120 bps YoY to 9.5%, with absolute EBITDA increasing 21% YoY to Rs 33.6 crore. PBT losses narrowed down to Rs 2.3 crore vs. Rs 10.5 crore in Q4FY20. V-Mart, during the quarter, added seven new stores taking the total count to 279. The company continues to remain debt free. With the recently concluded QIP, its liquidity position remains intact with cash worth ~Rs 400 crore.
We maintain BUY on the stock with unchanged target price of Rs 3500 (20x FY23E EV/EBITDA).