ICICI Securities's research report on Vishal Mega Mart
VMM sustained its strong growth momentum (+22.4% YoY revenue growth), driven by 12.8% SSSG and healthy retail area expansion. Profitability surprised us positively, driven by better revenue mix (higher apparel sales), operational efficiencies and operating leverage. Management remains focused on disciplined expansion, value-driven pricing, and cost efficiency to sustain profitable growth in the near term. We expect VMM’s outperformance to continue on the back its strategic pillars of: 1) “Open Price Point” delivering unmatched value proposition to consumers, 2) successful scaling up of own brands and 3) deeper penetration in tier-2 and beyond cities. Maintain BUY.
Outlook
Maintain BUY with a DCF-based target price of INR 175 (was 180 earlier). Key risks: Slower-than expected store addition and SSSG, exit of key managerial personnel and customer shifting towards convenience (quick commerce).
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