Motilal Oswal's research report on V-Mart Retail
V-Mart Retail’s (VMART) revenue grew 16% YoY in 3QFY25, led by strong SSSG (10%) and store additions. EBITDA beat our estimate by 12%, aided by improvement in gross margin for offline format, lower losses in LimeRoad (LR), and benefits from unprofitable store closures in Unlimited. VMART management indicated that it is focusing on volume-led growth and would even look to reduce prices of certain products to drive growth amid rising competition in value retail. Our FY25-26E revenue is broadly unchanged, while we raise our EBITDA estimates by 7-10% on account of improved profitability in Unlimited and a reduction in LR losses. We expect a CAGR of 17%/42% in revenue/EBITDA over FY24-27, driven by high-single-digit SSSG and lower losses in LR.
Outlook
We value VMART at 15x Mar’27E EV/EBITDA (implies ~25x FY27E pre-IND AS 116 EBITDA) to arrive at our TP of INR3,850. We maintain our Neutral rating on VMART.
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