Motilal Oswal has given Buy recommendation for V-Mart Retail recommended buy rating on the stock with a target price of Rs 3500 in its researc with a target price of Rs. 3500 in its research report issued on May 31, 2021

Motilal Oswal’s research report on V-Mart Retail

V-Mart Retail (VMART)’s revenue was up 6% YoY (8% beat), driven by pent-up demand for shopping. The EBITDA beat was much stronger (99% beat), led by improving gross margins and cost measures. – We revise down our FY22 revenue/EBITDA estimates by 31%/33% due to the impact of the second wave, but maintain FY23 revenue/EBITDA estimates given the expectation of swift recovery. The company’s strong cost leadership, lean balance sheet, and secular growth opportunity should keep it in good stead. Maintain Buy.

Outlook

We assign a 22x FY23E EV/EBITDA multiple to arrive at TP of INR3,500. Given the huge growth opportunity in the Value Fashion segment and V-Mart’s strong execution capability, it has the potential to garner 25–30% EBITDA/PAT growth sustainably for a prolonged period – backed by 20%+ revenue growth (SSSG + new store adds). We retain our Buy recommendation.

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