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Motilal Oswal Report
Dometic brokerage firm Motilal Oswal has reiterated its Buy rating on Vishal Mega Mart Ltd. with a higher target price of Rs 165 from earlier Rs 160, implying a potential upside of 50% from current levels.
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The brokerage's target price is premised on a DCF-implied ~34 times Sep'28E pre-IND AS 116 EV/Ebitda (implying ~51x Sep'28E EPS).
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Valuation and view
Motilal Oswal said Vishal Mega Mart continues to be one of the most consistent retail players in its coverage universe, supported by a diversified product mix, ownership of opening price points, significant contribution from its own brands, and lean cost structure provide it with a strong moat against intense competition from both offline and online value retailers.
The brokerage, however, highlighted that potential promoter stake sales following the lock-in expiry, relatively low long-term promoter ownership, and uncertainties around the continuity of the company's long-serving CEO beyond June 2027 remain key overhangs for the stock.
Motilal Oswal said its earnings estimates remain largely unchanged, as the positive impact of an improvement in gross margins is expected to be broadly offset by elevated employee costs.
The brokerage expects Vishal Mega Mart to deliver a revenue, pre-Ind AS Ebitda and PAT CAGR of 19%, 24% and 27%, respectively, over FY26-FY29. The projected growth is driven by around 10% annual retail area expansion, sustained double-digit same-store sales growth and gradual margin improvement.
Motilal Oswal has reiterated its 'Buy' rating on the stock with a revised target price of Rs 165, implying nearly 50% upside from current levels
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