Motilal Oswal's research report on V-MARTIn the last one-year, the Apparel retail sector has been one of the worst hit and is still operating below pre-COVID levels, raising concerns of a permanent business impairment risk to retailers. Yet what we like about VMART is: With a focus on smaller towns and largely on high streets, VMART has seen a better recovery than other Apparel retailers. Footfalls are expected to normalize in the coming 1-2 quarters. Value retail has a long runway for growth, with a large lower tier market and a compelling value proposition.
We value the stock at FY23E EV-to-EBITDA ratio of 23x (in line with its pre-COVID three-year average EV-to-EBITDA multiple of 23x), increasing our target price to INR3,500. Retain Buy.
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