Amazon Great Indian Festival 2020 - Electronics
Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Amazon Great Indian Festival 2020 - Electronics
Research

| More

V-MART Retail - Best play in value fashion segment; initiating with BUY - ICICI Securities

Posted On: 2020-09-27 23:39:55


V-MART (value fashion retailer) is well positioned to capture growth opportunities in tier 2-4 cities with aggressive store openings and first-mover advantage. It has already built a successful and highly profitable business model. However, near term focus would be on preserving cash through cost reduction, rationalising capex and optimising working capital. Rising competition, increasing share of new stores vs matured stores, and investment in supply chain will keep margin range-bound and return ratios steady. We like the company's revenue growth potential, timely execution and best-in-class return ratios. Initiate with BUY and DCF-based target price of Rs2,500/share on Sep'22E.

- Large opportunities in value fashion segment: Tier 2-4 markets provide huge opportunities based on demand and under-serviced appetite for quality products. V-MART, being one of the low-cost value fashion retailers, will be key beneficiary as it bridges this gap to match consumer aspirations. Company currently has 266 stores in 191 cities across 19 states (out of 600+ districts and 5,000+ cities and towns). Post lockdown relaxations, currently >90% of network is operational and has witnessed a positive recovery trend in sales.

- Aggressive store additions to resume from FY22E: V-MART's revenues have grown at 18% CAGR led by network additions which have more than doubled over FY15-20 coupled with average SSSG of ~6%. Management usually targets 18-20% area addition p.a. through cluster-based expansion strategy. Given Covid-19 disruptions in FY21, the store addition plans are likely to take a halt in FY21E; but should resume from FY22E. Accordingly, we model average 39 stores additions p.a. with area additions at 12% CAGR over FY20-23E.

- Margins to remain range-bound; albeit industry leading: Company's focus is on market share gains by passing the cost benefits over margin expansion. Increasing share of new stores and investment in supply chain (warehouse, omni channel, etc.) would keep margins range-bound. Nevertheless, margins would remain industry- leading on the back of its low costs structure (low rentals and A&P spends), cluster-based store expansion strategy, better negotiation terms with vendors, & operating leverage. The steep cost arbitrage also acts as safety tool vs online players.

- Lean balance sheet; better than peers return ratios: V-MART's entire growth in the past few years has been funded via internal accruals and IPO proceeds. The company is net cash since FY16 and guided to exit even FY21E with same status. Recently, the company has passed an enabling resolution to raise upto Rs5bn to explore various growth opportunities. We model FCF generation of Rs620mn post factoring-in working capital blockage and capex of Rs1bn and Rs1.8bn respectively over FY20-FY23E. V-MART's industry-leading return ratios (300-500bps higher than peers) are likely to remain steady at 16-17% over FY21E-FY23E.

- Initiate with BUY: We model 11-14% revenue / EBITDA / EPS CAGR over FY20-FY23E after factoring-in 45% YoY drop in EBITDA in FY21E. DCF based our target price on Sep'22E implies 18% EBITDA CAGR over the next 10 years discounted at 11% WACC and assuming 6% terminal growth.

Shares of V-MART RETAIL LTD. was last trading in BSE at Rs.2029.95 as compared to the previous close of Rs. 2007.3. The total number of shares traded during the day was 225 in over 134 trades.

The stock hit an intraday high of Rs. 2094.7 and intraday low of 2014.7. The net turnover during the day was Rs. 460382.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com

Amazon Great Indian Festival 2020 - Mobiles


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Reiterate ADD on Amara Raja Batteries - Pent-up demand leads to healthy 2Q - HDFC Securities

Maintain REDUCE on Titan - Reasonable print - HDFC Securities

REDUCE on RBL Bank - Some positives, but key concerns remain - HDFC Securities

Maintain REDUCE on Marico - Saffola shines with PCNO recovery, muted margin - HDFC Securities

Maintain ADD on Dr. Reddy's Labs - Good quarter, lower SG&A cost is encouraging - HDFC Securities

Piramal Enterprises - Acquisition of stake from JV partner - Angel Broking

Maintain BUY on Axis Bank - Provision buffers strengthened (further) - HDFC Securities

AU Small Finance Bank - Q2FY21 Result - Angel Broking

L&T - Q2FY21 - Angel Broking

RBL Bank - Q2FY21 Result - Angel Broking

Axis Bank - Q2FY21 Result - Angel Broking

Marico Ltd - Q2FY21 Result Update - YES Securities

Titan Company Ltd - Q2FY21 Result Update - YES Securities

Axis Bank Limited - Q2FY21 Result Update - YES Securities

RBL Bank Limited - Q2FY21 Result Update - YES Securities

Multi Commodity Exchange of India - Operating leverage aids strong EBITDA performance - ICICI Securities

Titan Company - Faster-than-expected recovery - ICICI Securities

Marico - Strong performance across portfolio - ICICI Securities

Heritage Foods - Lower procurement prices leading to highest EBITDA margin in past decade - ICICI Securities

Axis Bank - Strong core again utilised to create provisioning buffer - ICICI Securities

Supreme Industries - Beat on all counts - ICICI Securities

GSK Pharmaceuticals - Recovery from COVID-19 impact - ICICI Securities

Hero MotoCorp - Solid demand recovery expectations priced in - ICICI Securities

Cement - Demand / prices improve further in Oct'20 - ICICI Securities

CEAT - Replacement demand drives outperformance - ICICI Securities

Dr. Reddy's Laboratories - Outperformance continues - ICICI Securities

ICICI Prudential Life Insurance - VNB trajectory in-line despite YoY dip in protection in Q2 - ICICI Securities

Bharti Airtel - Q2FY21 Result Update - ICICI Securities

Marico - Q2FY21 Result Update - ICICI Securities

Larsen & Toubro - Q2FY21 First Cut - ICICI Securities

Sanofi India - Q3CY20 Company Update - ICICI Securities

Adani Ports and SEZ - Quant Pick - ICICI Securities

Nippon Life India AMC - Q2FY21 Result Update - ICICI Securities

Tata Motors - Q2FY21 Result Update - ICICI Securities

Derivatives Strategy - Mahanagar Gas - Positional Future - ICICI Securities

Supreme Industries - Q2FY21 First Cut - ICICI Securities

Dr Reddy's Laboratories - Q2FY21 First Cut - ICICI Securities

Marico Ltd - Q2FY21 First Cut - ICICI Securities

Apcotex Industries - Q2FY21 First Cut - ICICI Securities

V-Guard Industries - Q2FY21 First Cut - ICICI Securities

Titan Company - Q2FY21 First Cut - ICICI Securities

Navin Fluorine - Q2FY21 First Cut - ICICI Securities

PI Industries - Q2FY21 First Cut - ICICI Securities

L&T - Q2FY21 Earnings First Cut: Beat on EBITDA margins - YES Securities

Bharti Airtel - Q2FY21 result - Angel Broking

Dr.Reddy's Lab - Q2FY21 - Angel Broking

BUY on Mahindra & Mahindra Financial Services - Remains an inexpensive rural play - HDFC Securities

Radico Khaitan - Q2FY21 - Angel Broking

Maintain BUY on CDSL - Firing on all cylinders - HDFC Securities

REDUCE on Nippon Life India Asset Management - Market share stabilising - HDFC Securities







Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019