Buy V-Mart; target of Rs 4100: ICICI Direct

ICICI Direct's research report on V-Mart

V-Mart, having over the years built its fortress in non-tier I cities, is well poised to capture market share in the growing ~Rs 2.5 trillion value fashion industry. The company enjoys strong moats that would provide an edge over increasing competition in tier III-IV regions. V-Mart follows a cluster based approach of adding stores within a radius of 50-100 km. This gives it better economies of scales, supply chain efficiencies and better understanding of fashion needs of the specific region The company, over the last two years, has expanded its reach in the interior parts of the country by opening stores in tier IV cities (~12% of total stores)

Outlook

We continue to remain structurally positive and maintain BUY rating We value V-Mart at Rs 4100 i.e. 22x FY23E EV/EBITDA