Firm overview

Integrated in 2001 and headquartered in Gurugram, Vishal Mega Mart is a hypermarket chain that sells a variety of merchandise like attire, groceries, electronics, and residential necessities by means of its portfolio of personal manufacturers and third-party manufacturers. The corporate sells its merchandise although a pan-India community of 645 Vishal Mega Mart shops (30 September 2024) and Vishal Mega Mart cell utility and web site throughout three main product classes – attire, common merchandise and FMCG. As of 30 September 2024, it has presence in 414 cities in 28 states and two union territories. The corporate was ranked as one of many high two offline-first diversified retailers in India.

Objects of the provide

• To attain the advantages of itemizing the Fairness Shares on Inventory Exchanges.

• Perform the provide on the market of fairness shares aggregating Rs.80,000 million by the Promoter Promoting Shareholder.

Funding Rationale

• Concentrate on center and decrease revenue inhabitants – The corporate primarily caters to the big and rising center and lower-income segments of the Indian inhabitants. It operates an in depth community of shops in Tier 2 cities and past. With growing entry to digital channels, shoppers in these areas have gotten extra uncovered to new services, which drives demand and opens new retail alternatives as they search to undertake higher-tier city existence. The corporate gives a broad vary of merchandise below each its personal and third-party manufacturers. It stands out amongst offline-first diversified retailers by offering a well-rounded mixture of merchandise that meets the wants of center and lower-income shoppers. Its product vary spans varied value factors, together with attire and quite a lot of objects akin to attire, denims, t-shirts, shirts, bedsheets, spin mops, casseroles, pet bottles, butter cookies, savory snacks (like navratan namkeen), sanitary napkins, oats, fruit juice, noodles, and extra.

• Diversified portfolio and geographical footprint – The corporate gives a broad portfolio of its personal manufacturers throughout varied classes, together with attire for males, girls, kids, and infants, in addition to family items, house furnishings, journey equipment, kitchen home equipment, utensils, crockery, footwear, and life-style merchandise inside the common merchandise class. Within the fast-moving client items (FMCG) sector, the corporate offers meals merchandise, non-food objects, and staples. In FY24, 19 of its personal manufacturers achieved gross sales exceeding Rs.1,000 million every, with six manufacturers surpassing Rs.5,000 million every in gross sales. The corporate’s income from the sale of its personal manufacturers grew at a compound annual progress charge (CAGR) of 27.72% between FY22-24. Over the previous three years, the corporate has considerably enhanced its product choices within the non-apparel section, introducing objects akin to air fryers, garment steamers, egg boilers, beard trimmers, juicers, sound bars, journey audio system, induction cooktops, vegetable choppers, peanut butter, cashew almond cookies, fruit and nut cookies, chips, hair oil, and biscuits, amongst others. As of March 31, 2024, the corporate ranks second among the many main offline-first diversified retailers in India, primarily based on the variety of cities it operates in.

• Monetary monitor report – The corporate reported a income of Rs.8,954 crore in FY24 towards Rs.7,619 crore in FY23, a progress of 18%. The income has grown at a CAGR of 26% between FY22-24. The EBITDA of the corporate in FY24 is at Rs.1,429 crore, a 40% YoY progress in comparison with Rs.1,021 crore of FY23. The online revenue of the corporate in FY24 is Rs.462 crore. The online revenue elevated by 44% in comparison with Rs.321 crore in FY23. The CAGR between FY22-24 of EBITDA is 33% and PAT is 51%.

Key dangers

• OFS Danger – The IPO consists of solely an Supply for Sale of Fairness Shares price as much as Rs.80,000 million by the Promoting Shareholders, together with the corporate Promoter. The complete proceeds from the Supply for Sale shall be paid to the Promoting Shareholders, together with Promoter and the Firm won’t obtain any such proceeds. The provide contains the sale of stake price Rs.80,000 million by promoter Samayat Companies LLP.

• Dependence on third get together distributors – The corporate doesn’t have any in-house manufacturing amenities and relies on third get together distributors for the manufacture of all of the merchandise below its personal model. Any incapacity by the third get together distributors in assembly the product specs, high quality, and manufacturing requirements would possibly influence the operations, money stream and monetary circumstances of the enterprise.

• Danger of strategic inertia – If the corporate fails to determine and successfully reply to altering client preferences in a well timed method, the demand for its merchandise would possibly lower, impacting the market share and outcomes of operations.

Outlook

The corporate has achieved constant progress in its monetary efficiency over the reported durations and we count on the corporate to proceed its progress momentum. The aspirational retail market in India, fueled by client demand for merchandise that mix prime quality and affordability, will proceed to be a key driver of the nation’s retail sector the place the corporate has suitably positioned itself to seize an growing market share. In accordance with RHP, Avenue Supermarts Restricted and Trent Restricted are the one listed rivals for Vishal Mega Mart Restricted. The friends are buying and selling at a median P/E of 130.91x with the best P/E of 163.59x and the bottom being 98.23x. On the increased value band, the itemizing market cap of Vishal Mega Mart shall be round ~Rs.35,168 crore and the corporate is demanding a P/E a number of of 76.13x primarily based on put up concern diluted FY24 EPS of Rs.1.02. When put next with its friends, the problem appears to be totally priced in (pretty valued). Primarily based on the above views, we offer a ‘Subscribe’ ranking for this IPO for a medium to long-term Holding.

Notice: Please notice that this isn’t a suggestion and is meant just for instructional functions. So, kindly seek the advice of your monetary advisor earlier than investing.

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