Vishal Mega Mart IPO - Price Band, Issue Details, Financials, Peer Comparison, Risks And More: Motilal Oswal

Motilal Oswal Report

Vishal Mega Mart Ltd. launched its initial public offering today and the offer closes for subscription on Dec. 13. An Indian retail company has set the price band in the range of Rs 74 to Rs 78 per share. The minimum bid lot is 190 shares.

The Rs 8,000 crore IPO comprises only of offer-for--sale with no fresh issue component.

The shares will be listed on the exchanges on Dec. 18.

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Vishal Mega Mart, the second largest offline-first diversified retailer, is well placed to capitalize on the growing middle class population in India. Extensive expansion plans along with focus on diversification, high margin products and operating leverage is likely to bolster revenue growth. At Rs 78, issue is priced at 76 times FY24 P/E and looks reasonable compared to other listed peers.

We recommend investors to ‘Subscribe’ to the issue.

Risk and Concerns

• Company does not manufacture any of its products that are sold in its stores, and rely entirely on third party vendors for manufacturing of all products under its own brands.

• It has received two directives with requests for information from the Enforcement Directorate to furnish information and documents as part of its investigation. Any adverse outcome in such matters may lead to future inquiries or escalate to investigations, legal proceedings or any possible penalties.

• If it fails to identify and effectively respond to changing consumer preferences in a timely manner, the demand for its products could decrease, causing the results of operations, financial condition and cash flows to be adversely affected.

• Competition from online retailers and e-commerce marketplaces is expected to increase with new entrants entering the retail and consumer industry, who may have more resources and flexibility in responding to changing business and economic conditions.

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