Vishal Mega Mart's Rs 8,000-crore IPO opens for public subscription today, backed by private equity firm Kedaara Capital. The company’s robust financial health, debt-free status, and extensive market presence offer investors a good opportunity, said analysts. Brokerages have issued 'Subscribe' ratings, citing the company's dominance in organised retail and promising long-term growth prospects.
Meanwhile, a strong grey market premium (GMP) points to high investor interest ahead of its December 18 listing. Vishal Mega Mart's public issue coincides with the IPOs of two other mainboard companies — Sai Life Sciences and Mobikwik — also scheduled to open on December 11.
The price band for the Gurugram-based supermart major has been fixed at Rs 74-78 per equity share. Vishal Mega Mart IPO will conclude on December 13, with the listing of shares proposed to take place on both NSE and BSE next week on 18th December. Shares are likely to be allotted to successful bidders on December 16 (Monday).
Vishal Mega Mart IPO GMP
According to market observers tracking the grey market premium activities, the shares of Vishal Mega Mart are commanding a GMP of around 22 percent in the unofficial market. Investorgain quoted a GMP of Rs 17 over the IPO price of Vishal Mega Mart, indicating a listing gain of 21.79 percent.
The grey market premium reflects the level of market interest in an IPO, but the actual share price at the time of listing on the stock exchanges may vary significantly.
Incorporated in 2001, Vishal Mega Mart Ltd (VMMT) is a hypermarket chain offering a diverse range of products across apparel, general merchandise, and FMCG, including groceries, electronics, home essentials, and staples. The company caters to everyday consumer needs with its own brands and third-party brands, spanning clothing, home furnishings, travel accessories, kitchen appliances, and both food and non-food items.
Vishal Mega Mart IPO: Should you subscribe?
Vishal Mega Mart's dominance in organised retail
AUM Capital has given a 'Subscribe' recommendation to the issue saying that the rising disposable income and a preference for quality and hygienic products amongst the population gives established companies like Vishal Mega Mart an edge over the unorganised sector as well as stiff competition to other established branded retails chains such as Spencers.
"Healthy financials and a debt free status gives it an impetus. We would recommend a 'subscribe' for the long term," said AUM Capital in a note.
Vishal Mega Mart targets middle and lower-middle-income people, through a pan India network of 645 stores (as of September 30, 2024) and their Vishal Mega Mart mobile app and website. As of September 30, 2024, the company has a presence across 414 cities in 28 states and two union territories.
It is a debt free company with Cash & Liquid Investments worth Rs 687 crore at the end of September 2024.
Vishal Mega Mart's Rs 8,000-cr IPO sees consistent rise in GMP as subscription begins this week
Fair valuation supports long-term gains
Anand Rathi has also given a 'Subscribe' rating to Vishal Mega Mart IPO in its latest research report as on December 10 2024. "We believe that the IPO is fairly priced and recommend a 'Subscribe-Long term' rating to the IPO," said the brokerage.
Tier II expansion boosts growth prospects
Delhi-based brokerage SMIFS also gave a 'Subscribe' rating to the issue "We recommend subscribe to the issue as a long term investment as the expansion into Tier II cities and hyperlocal delivery service aids growth coupled with rising per capital income in the country. While some risk could emanate from the diversification into the Western parts of the country."
The company is looking to open 80-100 new stores in Tier II cities henceforward, aiming to continue its expansion spree by entering new cities and towns with populations exceeding 50,000 and strengthening its presence in existing markets, as evidenced by its growth in Hyderabad and Karnataka.
Key risks to consider
However, Master Capital Service highlighted key risks in its IPO note on the issue, saying it relies entirely on third party vendors for the manufacturing of all products under company’s brands. It also said that the significant portion of company revenues come from sale of products from stores located in Uttar Pradesh, Karnataka and Assam, and any adverse developments in these states may have an adverse effect on its business.
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