Vishal Mega Mart Limited is a supermarket chain for middle and lower-middle income India. They curate a diverse range of merchandize through their portfolio of own brands and third party brands to fulfil the needs of consumers. They offer products across three major product categories, i.e., apparel, general merchandise and fast-moving consumer goods, through a pan-India network of 645 Vishal Mega Mart stores (as of September 30, 2024) and their Vishal Mega Mart mobile application and website. Company targets middle and lower middle-income India. The total addressable market for aspirational retail in India is Rs 68-72 trillion (US$820-870 billion) for Calendar Year 2023, and is expected to be Rs 104-112 trillion (US$1,250-1,350 billion) by Calendar Year 2028, growing at a CAGR of 9%. Company's own brands are significant and growing contributors to the sales and constituted 72.86%, 71.57%, 71.81%, 70.50% and 70.20% of the revenue from operations for the six months period ended September 30, 2024 and 2023, and the FY 2024, 2023 and 2022, aggregating to Rs 36,665.57 million, Rs 30,197.83 million, Rs 63,993.42 million, Rs 53,479.79 million and Rs 39,228.81 million during six months period ended September 30, 2024 and 2023, and the Financial Years 2024, 2023 and 2022, respectively. The revenue from operations from sales of own brands grew at a CAGR of 27.72% between the Financial Years 2022 and 2024. Company has established a pan-India network of 645 stores across 414 cities in 28 states and two union territories, as of September 30, 2024. As of September 30, 2024, the Material Subsidiary, Airplaza Retail Holdings Private Limited, operates 643 stores, on a leasehold basis, and the franchisees operate 2 stores, also on a leasehold basis. For convenience of the consumers, the stores are with consistent store layouts that are easy to navigate. Since August 2021, they also provide an omni-channel shopping experience giving consumers the ability to shop online through the mobile application and website, by checking the product availability at stores nearest to them, and placing orders online for delivery or pick-up from the stores. Company operates a hub and spoke distribution model to source products and manage the in-store inventory. As of September 30, 2024, they operate one central distribution centre, one distribution centre and 17 regional distribution centres, each located in close proximity to the major demand areas. The central distribution centre and distribution centre are managed by the Company, and the regional distribution centres are managed by the Promoter, Samayat Services LLP, through third parties appointed by them. They have an asset-light business model with all the distribution centres and stores leased, and the products manufactured by third-party vendors or sourced from third party brands. The stores, with an average floor area ranging around 18,000 square feet, offer a consistent shopping experience to the consumers with consistent designs and layouts that prioritize visibility, ease in navigation, and accessibility. Their average payback per store for new stores opened during Financial Year 2023 was 19 months. As per financial performance, Vishal Mega Mart Limited has posted total income / net profits of Rs 5,653.85 Cr / Rs 202.77 Cr (FY22), Rs 7,618.89 Cr / 321.27 Cr (FY23), Rs 8,945.13 Cr / Rs 461.94 Cr (FY24) and Rs 5,053.42 Cr / 254.14 Cr (H1 FY25). So as per previous financials data, company has shown very good growth. Company has an average EPS of Rs 0.81 and average RoNW of 6.85% for last three fiscals. Issue is priced at a P/BV of 5.94 as per NAV of Rs 13.14/- as on 30.09.24. If we attribute latest earnings of FY23, FY24, TTM and annualised FY25 on equity post issue, then asking price is at a P/E of around 109.46, 76.13, 67.54 and 69.19 respectively. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, six lead managers are associated with this IPO, and have handled around 122 IPOs in last three fiscals. ( As on 07.12.24 ) As per financials, Vishal Mega Mart Limited has shown good growth, RoNW is 8.18% and P/E is 109.46, 76.13, 67.54 and 69.19 respectively as per FY23, FY24, TTM and annualised FY25 earnings. Company has shown growth and valuation looks reasonable compared to peers. Company is a national supermarket chain with 645 stores all over India, which is very competitive and fragmented business segment. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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