JP Morgan, Morgan Stanley Initiate Coverage On Vishal Mega Mart With 'Overweight'—Here's Why

Vishal Mega Mart's growth strategy looks more defendable than peers' given its scale, according to Morgan Stanley. The risks cited by the brokerage include customers' changing proposition towards convenience, significant change or departure at the senior management level or promoter exit risks, it added.

'Its fashion first' focus coupled with affordable price points and a diversified portfolio helps it tap into the large unorganised aspirational retail market, according to JP Morgan.

JP Morgan has initiated coverage on Vishal Mega Mart with an 'Overweight' rating and March 2026 target price of Rs 125.

The company with its pan-India store footprint of more than 650 stores is among the fastest growing, profitable retail chains with scale. The brokerage expects 18% revenue and 28% earnings per share CAGRs over financial year 24-27. This is expected to be driven by expanded store footprint and sustained cost-efficient operations. Heightened focus on running a leaner cost model differentiates it from other retailers, according to JP Morgan, and lends healthy return ratios.

Since its listing in December 2024, the brokerage believes, the company is is well positioned to tap into the large market potential. This is present in low-middle income group India with its product assortment and customer-centric approach. Its loyalty program has 134 million users and it has a scaled portfolio of 26 own brands which account for 73% revenue share.

Store additions are cited as key growth enablers. The brokerage's extensive analysis show ample room for store expansion, low store density and limited risk of competition from quick commerce.

The brokerage forecasts 80 to 85 new store additions every year taking overall store count to 856 by financial year 2027. This coupled with Same-Store Sales Growth is expected to support 18% revenue CAGR over the coming years. Shorter store payback period and an asset-light operating model allow for faster store rollout.

Margins score better compared to most peers aided by sharp focus on operating a leaner cost structure across the value chain, positioning it as one of best in class.

The competitive intensity will increase as well-established value retailers scale up. In top-45 cities, up to 30% of the stores share a pincode with Trent’s Zudio. The company continues to see demand cyclicality and inventory risk, along with high dependence on three states.

Morgan Stanley also initiated coverage with an 'Overweight' rating. The business is looking good on market tiering, product proposition, consumer captivity and profitable business, according to the brokerage.

The high barriers to entry remains a concern, according to the brokerage. The companies do see visible lines of separation between value and convenience, but in the eyes of consumers, these lines may be getting slightly blurred.

According to MS, this expanded customer proposition of instant indulgence is unlikely to change anytime soon unless convenience becomes more expensive.

Vishal fulfills consumers' aspirations at affordable prices, according to the brokerage. It stands out compared to peers because of the large presence in Tier 2 cities, high share of own brands in its portfolio with lower prices. Its FMCG business garners significant footfall and its Apparel business accounts for 45% of revenues. This drives up margins, which gives Vishal a more defendable growth strategy, according to the brokerage.

It expects Vishal to deliver 20% revenue. The target price is Rs 161.

Vishal Mega Mart Ltd.'s stock fell as much as 2.49% during the day to Rs 100.25 apiece on the NSE. It was trading 2.16% lower at Rs 100.59 apiece, compared to an 1.05% decline in the benchmark Nifty 50 as of 11:07 a.m.

It was down 10.21% in the last 12 months. The total traded volume so far in the day stood at 0.3 times its 30-day average. The relative strength index was at 38.7.

Three out of the four analysts tracking the company have a 'buy' rating on the stock, and one recommends a 'hold', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 134, implying an upside of 33.2%.