Buy V Mart Retail, target price Rs 4082: Centrum Broking

Centrum Broking has buy call on V Mart Retail with a target price of Rs 4082. The current market price of V Mart Retail is Rs 2711.45. Time period given by analyst is one year when V Mart Retail Ltd. price can reach defined target.

V Mart Retail Ltd., incorporated in the year 2002, is a Mid Cap company (having a market cap of Rs 5379.31 Crore) operating in Retail sector.

V Mart Retail Ltd. key Products/Revenue Segments include Income from Retailing and Other Operating Revenue for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-03-2022, the company reported a Standalone Total Income of Rs 461.57 Crore, down -33.55 % from last quarter Total Income of Rs 694.61 Crore and up 29.57 % from last year same quarter Total Income of Rs 356.22 Crore. Company reported net profit after tax of Rs -2.61 Crore in latest quarter.

Investment Rationale
The brokerage expects V-Mart to report 187% YoY growth in revenues as consumption in core markets saw strong uptick during Apr/May, however it saw unrest in UP/Bihar/Jharkhad in June leading market closure in few pockets driving weaker off-take. V-Mart executed ~12% price increases to pass on rising cotton prices. Interestingly management confirmed that footfalls have picked up and reached to pre-Covid levels. Though company added net 18 new stores in Q1FY23 the effect of that can be seen in Q2. However, inflation remains at all-time high both for polyester and cotton yarn price impacting margins. In addition, the brokerage expects ~Rs850mn revenue contribution on account of Unlimited stores in Q1. It estimates EBITDA margin to rise to 11.8%(+1290bp) while APAT at Rs44mn against loss of Rs287mn in previous year.

Promoter/FII Holdings
Promoters held 46.14 per cent stake in the company as of 30-Jun-2022, while FIIs owned 18.19 per cent, DIIs 25.56 per cent.