Buy Vishal Mega Mart; target of Rs 175: ICICI Securities

ICICI Securities's research report on Vishal Mega Mart

High confidence on Kerala TAM opening up in a material way was one of the major takeaways from our meeting with GK. Read on: (1) Strong traction in Kerala with a ~100-store opportunity; entry in Tamil Nadu will be in a phased manner to protect store economics. (2) Mix is premiumising, with premium apparel growing the fastest in a demand environment that is currently fully volume-led. (3) QC contributes ~3-4% of store revenue on average (range: 2-9%) with ~20% new customers. (4) Private labels remain a key margin lever with healthy penetration across core categories, though adoption varies by segment. (5) A clear value gap vs. local cooperatives and a differentiated role vs. DMart supports competitive positioning. (6) Execution remains strong with shrink (inventory loss) at ~0.59% and ROCE at ~70%, supporting a fully company-operated model. BUY.

Outlook

We largely maintain our earnings estimate; modelling revenue/ EBITDA/PAT CAGR of 19%/21%/26% over FY25-28E. Maintain BUY with a DCF-based target price of INR 175.