Investec has initiated coverage on Vishal Mega Mart with a 'buy' recommendation and a price target of ₹144 per share, projecting a 21.3% upside from current levels. According to reports from CNBC TV18, the brokerage views the retail chain as a 'clean double-engine growth story' driven by 10% same store sales growth (SSSG) and 13% store additions. This growth trajectory is expected to deliver an 18% revenue and 21% earnings per share (EPS) compound annual growth rate (CAGR) over FY26-29, supported by what Investec describes as a 'ruthlessly tight' cost structure. The brokerage emphasizes that Vishal Mega Mart is structurally best positioned to out-execute competitors through its scale of 795 stores, over 74% private-label mix, sharp sourcing and pricing capabilities, and strong management team. Investec notes that the company presents an 'outsized opportunity' in the value retail segment and highlights its execution capabilities positioning it well to capitalize on growing consumer demand across India.
Vishal Mega Mart delivered robust March quarter results, with net profit increasing 46% to ₹168 crore from ₹115 crore in the previous year. As reported by CNBC TV18, revenue grew 22% to ₹3,114 crore from ₹2,547.8 crore in the fourth quarter of the last fiscal. The company's EBITDA increased 19% to ₹424.6 crore, though EBITDA margin contracted to 13.6% from 14% in the year-ago period. The strong quarterly performance has reinforced Investec's positive outlook on the retailer's growth prospects, with the brokerage expecting the company to deliver a combination of same-store sales growth (SSSG) and network expansion over the next few years.
At 42x estimated price-to-earnings for FY28, Investec considers Vishal Mega Mart's valuations attractive in the context of its growth prospects. According to CNBC TV18, the brokerage highlights the company's 21% EPS CAGR (FY26-29) and 24% post-tax ex-goodwill return on capital employed. The stock currently trades at ₹118.90, representing a 52% gain from its issue price, though it has declined from its post-listing high of ₹157. Among 20 analysts covering the stock, 19 have 'buy' ratings and only one maintains a 'sell' rating, indicating strong consensus support. Investec noted that the stock trades at around 42 times FY28 estimated earnings, which it considers reasonable given the company's projected revenue and earnings growth.
Investec emphasizes Vishal Mega Mart's structural advantages in India's mass retail formalization, noting it offers the largest total addressable market (TAM) in consumption. The company sees significant opportunity from the formalisation of value retail as a standout structural consumption opportunity in India, underpinned by aspirational middle and lower-middle income consumers and accelerating adoption of branded products in tier-2/3 cities and beyond. Along with its diversified category mix, expanding footprint, high private-label skew, sharp design and sourcing capabilities, control on product quality and pricing, Vishal Mega Mart's strong and experienced management team is expected to help post a long growth runway, according to Investec's analysis. The brokerage believes that both store expansion and improving sales productivity could contribute to the company's future growth trajectory.
