Buy V Mart Retail, target Rs 2401: Karvy Stock Broking

Karvy Stock Broking Ltd has a buy call on V Mart Retail Ltd. with a target price of Rs 2401. The current market price of V Mart Retail Ltd. is Rs 2339.45.
Time period given by the brokerage is a 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 4307.23 Crore) operating in Retail sector.

Investment rationale by Karvy
The market opportunity for organized value retailing is immense in India and the company has been executing on its strategy to be a leader in the markets that it operates in. The company is expecting to open more stores in Tier IV towns where the competitive intensity is likely lower and the company will be able to generate better margins. Given a strong balance sheet and rich cash flows, we value the stock at 38xFY20E EPS (industry average) with a revised target price of Rs. 2401 with a potential upside of 18% with a “BUY” rating. However, changing customer preference, massive competition and rising e-commerce preference are key risks to the call.