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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal has initiated coverage on V2 Retail Ltd. with a Buy rating and has set a target price of Rs 275, premised on a discounted cash flow-implied ~15 times Sep'28E pre-Ind AS EBITDA, implying ~25x Sep'28E pre-Ind AS EPS and ~27% upside.
The brokerage believes the value-fashion retailer is well-positioned to benefit from rising demand in tier-2 and tier-3 cities, supported by aggressive store expansion, strong store economics, and a high private-label mix. It expects V2 Retail to deliver revenue and pre-Ind AS EBITDA CAGR of 40% and 38%, respectively, over FY26-29.
Bull case: Motilal Oswal's bull-case scenario assumes stronger execution, with revenue CAGR of around 49% over FY26-29 driven by higher same-store sales growth (SSSG) of 8% and faster store additions. The brokerage expects EBITDA margins to improve to 9.9% by FY28 and assigns a valuation multiple of 30x Sep'28E earnings, arriving at a bull-case target price of Rs 440, implying nearly 100% upside from current levels.
Bear case: In the bear-case scenario, the brokerage factors in slower demand and expansion, with revenue CAGR moderating to 24% and SSSG falling to 2%. Lower operating leverage could drag EBITDA margins to about 8.3% by FY28. Based on a lower valuation multiple of 20x Sep'28E earnings, Motilal Oswal derives a bear-case target price of Rs 150, indicating a potential 34% downside from current levels.
Key risks:
Execution and site-selection risk from rapid geographic expansion, intensifying competition from national value-fashion players, and higher assortment risk as in-house design scales beyond ~35–40%, potentially impacting sell-through, margins and store returns.
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