ICICI Securities maintains Buy on Vishal Mega Mart, target price Rs 140

ICICI Securities suggests buying Vishal Mega Mart shares. The target price is Rupees 140. Vishal Mega Mart's private label Fast-Moving Consumer Goods strategy is successful. It attracts customers and boosts other segments. The company focuses on value and quality. Revenue, EBITDA, and PAT are expected to grow significantly. Key risks include slower growth and key personnel leaving.

ICICI Securities has maintained a buy call on Vishal Mega Mart with a target price of Rs 140. The current market price of Vishal Mega Mart is Rs 104.5.

Investment RationaleICICI Securities' on-ground checks suggest Vishal Mega Mart has got its private label strategy in FMCG (~27% of revenue) right, providing value to its customers, a key driver for its footfalls and new customer acquisition for other segments (general merchandise and apparel). The brokerage noticed two unique features in its FMCG segment: a) SKUs were mostly large packs meant for monthly/longer consumption at competitive prices implying focus on consumers seeking value, and b) reputed manufacturers (specifically in foods) for its private label brands provide quality assurance to its customers, a key driver for private label adoption. These reasons, in their view, are key drivers for Vishal Mega Mart's private label success in FMCG, implying higher salience (~30%) and relatively higher gross margin vs peers in FMCG retail.

I-Sec's earnings estimates are unchanged, modelling in revenue/ EBITDA/PAT CAGR of 19%/20%/29% over FY24-27E. They maintain a BUY with DCF-based unchanged target price of Rs 140. Key risks are slower than expected store addition and SSSG, exit of key managerial personnel and custoomer shifting towards convenience (quick commerce as at pivots and scales on value).

Promoter/FII Holdings Promoters held 76.02 per cent stake in the company as of 31-Dec-2024, while FIIs owned 6.58 per cent, DIIs 9.

8 per cent..