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Hold V-Mart Retail; target of Rs 2177: CD Equisearch

CD Equisearch recommended hold rating on V-Mart Retail with a target price of Rs 2177 in its research report dated October 25, 2018.

November 01, 2018 / 04:39 PM IST
 
 
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CD Equisearch's research report on V-Mart Retail


With the help of rise in income levels, growing aspirations, favorable demographics and ease of credit, the Indian retail market is expected to grow to USD 1.6 tn by 2026 from USD 641 bn in 2016 (source FICCI). Given its under penetration to total trade, modern retail is well poised for growth. While the overall retail market is expected to grow at 12% p.a. (India is fifth-largest destination in retail space), FICCI expects modern trade to expand twice as fast at 20% p.a. and traditional trade at 10%. Propelled by omni-channel retail, modern retail in India is expected to double to USD 25.7 bn from USD 13 bn in three years. Yet,discounting by online retailers has taken a toll on physical retailers due to the shift from physical to
online platforms on heavy discounting, which has led retailers to rethink their business approach and to differentiate their product offering and experience.


Outlook


Growing brand visibility should aid in revenue growth at a CAGR of 17.8% over next two years. Yet, seasonality of business remains a concern, which V-Mart is trying to diversify by increasing its presence in new and existing markets - store count in states of J&K and Madhya Pradesh reached 4 and 6 respectively in Q1FY19 Vs 1 and 3 respectively in FY13. On balance, we maintain ‘hold’ recommendation on the stock with revised target of Rs 2177 (previous target Rs 1230) based on 34.0x FY20e earnings over a period of 9-12 months.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Nov 1, 2018 04:39 pm

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