Vishal Mega Mart IPO - Should You Subscribe? Read DRChoksey's Analysis

Deven Choksey Research Report

Vishal Mega Mart Ltd. will launch its initial public offering on December 11 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 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.

Outlook and Valuation:

Vishal Mega Mart, with its vast network of 645 stores covering 11.49 million square feet, stands out as a prominent player in the value retail segment.

The company showcases strong growth potential, driven by a 26% revenue CAGR (FY22-FY24), consistent Ebitda margins of 14%, and a well-balanced category mix of apparel (44%), FMCG (27%), and general merchandise (29%).

While its sales per sq. ft. at Rs 701 appear modest compared to industry benchmarks, this could be justified as it has a focus on catering to middle and lower-middle-income groups.

Its 14% same-store sales growth underscores its operational efficiency and strong customer demand. The projected valuation metrics, including a PE of 76 times and EV/Ebitda of 29x, appear attractive, reflecting its strong growth trajectory and market positioning.

Vishal Mega Mart presents an attractive opportunity for long-term investors seeking to benefit from India's expanding organized retail market. Hence, we assign a “Subscribe” rating to the IPO.

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