Buy V Mart Retail; target of Rs 4826: Anand Rathi

Anand Rathi's research report on V Mart Retail

V-Mart’s Q4 profitability improved, with a 272bps y/y higher EBITDA margin at 8.7% (~90bps above ARe), driven by lower Limeroad losses and better offline margins. FY25 sales/EBITDA grew ~17%/77% y/y, led by 11% SSSG. The focus is on enhancing product quality and designs, accelerating digital transformation and store network optimization/renovation to improve consumer experience. Apparel ASP declined a tad in FY25 due to the lower winter product sales mix. Benefiting from strategic store closures and product improvement, sales per sq.ft. for V-Mart/Unlimited grew ~11% y/y to Rs742/575. Net stores added were 53 (62 gross) in FY25, taking the total to 497. The company targets 13-15% net sq.ft. addition every year. Management guided to 17-20% revenue growth, with likely rangebound EBITDA margins as the focus is on gaining market share.

Outlook

Our FY26/27 revenue estimates are largely unchanged, while EBITDA is ~1% lower on average on incremental employee expenses. We retain our Buy rating, with a 12-month TP of Rs 4826 (earlier Rs5,150), 19x FY27e EV/EBITDA (21x FY27e).