Vishal Mega Mart, which has always become a favorite name for affordable shopping for the middle and lower middle class of India, has now emerged as a big opportunity for investors. In the latest report of ICICI Securities, it has been given a ‘BUY’ rating and a target of ₹ 140. The current share price is ₹ 106.40, which means that it expects an increase of 31%.
The big secret of the success of Vishal Mega Mart is stores spread in his small towns. About 70% of the company’s stores are in Tier-2 and small cities, where the discretionary expenses are increasing rapidly. It currently has 645 stores in 414 cities, and by FY27 they can increase to 861 stores. That is, the company is in the mood to give a speed to its expansion car.
Why is there so much growth expected?
Under the company’s ‘opening price point’ strategy, it gives private label products to customers at cheap prices. Its 73% of the products are private labels, which make the company’s margin and growth strong. According to the report, the company’s revenue growth between FY24 and FY27 will grow at the speed of 19% CAGR.
In FY24, the company’s Ebitda margin was 14%, which is expected to rise to FY27 to 15%. Private labels, low -cost business models and better supply chain management will play a big role in this.
Strong financial position and cash flow
The company’s strong financial position and efficient cost management will help it to stand and move forward in the competitive market. According to the report, the company is expected to reach the free cash flow of Rs 38 billion between FY24 and FY27, which will further strengthen its growth.
Vishal Mega Mart’s IPO was opened on 11 -1 December and was listed on NSE and BSE on 18 December. This IPO was listed on its issue price upper band at Rs 78 at Rs 110 and Rs 104 on NSE as against Rs 78.