Neutral V-Mart Retail; target of Rs 3500: Motilal Oswal

Motilal Oswal's research report on V-Mart Retail

VMART’s EBITDA jumped 89% YoY (beat) in 1QFY25, aided by 11% SSSG, a reduction in Limeroad losses and controlled ad spending. We raise our EBITDA estimates by 14%/11% for FY25/FY26, considering strong cost-control measures (rationalizing losses in Limeroad), the closure of non-performing stores, and improved SSSG (as indicated in our report) appeared to have played out in VMART’s favor.We estimate a CAGR of 17%/48% in revenue/EBITDA over FY24-26. The ongoing demand recovery in the value fashion category could be a key growth driver for VMART. Reiterate Neutral with a TP of INR3,500.

Outlook

We raise our EBITDA estimates for FY25/FY26 by 14%/11%, factoring in a CAGR of 17%/48% in revenue/ EBITDA over FY24-26. We reiterate our Neutral rating with a TP of INR3,500 (premised on 35x pre Ind-AS EV/EBITDA on Mar’26E).