Buy Aditya Vision; target of Rs 5000: Emkay Global Financial

Emkay Global Financial is bullish on Aditya Vision has recommended buy rating on the stock with a target price of Rs 5000 in its research report dated December 10, 2023.

Broker Research

December 11, 2023 / 13:43 IST

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Emkay Global Financial's research report on Aditya Vision

Aditya Vision (AVL), a consumer-durable retailer, holds leadership share of over 50% in Bihar/Jharkhand, aided by low penetration so far, curated assortment, competitive pricing, Buy & Win scheme, and impeccable service/consumer trust. AVL has passed the litmus test of scale and is now a well-oiled machine to pursue the 5x expansion opportunity in six states of the Hindi Heartland. SSG should remain above 20% in the near term, led by maturing of new stores and low penetration. AVL’s payback period of under 3yrs is ‘better-than-the-best’ in other retail formats. We expect AVL to post a strong, revenue-led EBITDA CAGR of over 30% during FY23-27E and in the mid-teens over FY27-35E. Maturing of new stores should lead to better asset sweating and allied ROIC gains (1,000bps+ in FY23-27E).

Outlook

Despite better growth prospects, valuation at 35x 1YF is at 35-50% discount to retail peers’ and provides scope for re-rating. We initiate coverage on AVL with BUY and Dec-24E TP of Rs5,000 (40x Dec-25 EPS).

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