The Rs 8,000 crore- initial public offering (IPO) of Vishal Mega Mart opens for bidding on Wednesday, December 11. The hypermarket chain is offering its shares in the range of Rs 74-78 apiece and investors can apply for a minimum of 190 equity shares and its multiples until Friday, December 13.
Incorporated In 2018, Gurugram-based Vishal Mega Mart is a hypermarket chain that sells a wide range of products like apparel, groceries, electronics, and home essentials. The IPO of Vishal Mega Mart is entirely an offer-for-sale (OFS) of up to 1,025.64 crore equity shares by its promoter Samayat Services.
Vishal Mega Mart offers a wide range of products across apparel, general merchandise and FMCG, including its brands for clothing, home furnishings, travel accessories, kitchen appliances, food, non-food items, and staples. It operates an asset-light business model, leasing all its distribution centers and stores.
Vishal Mega Marts targets middle and lower-middle-income people, through a pan-India network of 645 stores as of September 30, 2024 and their Vishal Mega Mart mobile app and website. The company has a presence across 414 cities in 28 states and two union territories as of September 30, 2024.
For the period ended on September 30, 2024, Vishal Mega Mart reported a net profit of Rs 254.14 crore with a revenue of Rs 5,053.42 crore. It has reserved 50 per cent of the net offer for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the allocation. Retail investors will have 35 per cent of reservation in the IPO.
Kotak Mahindra Capital Company, ICICI Securities, Intensive Fiscal Services, Jefferies India, JP Morgan India and Morgan Stanley India Company are the book running lead managers of the Vishal Mega Mart IPO, while Kfin Technologies is the registrar for the issue. Here's what a host of brokerage firms said about the IPO of Vishal Mega Mart:
SBI Securities Rating: Subscribe At the upper end of the price band, Vishal Mega Mart is valued at FY24 P/E multiple of 76.1 times on post issue capital. The company is scaling its presence across product categories and stores throughout India and has a track record of profitable growth, said SBI Securities.
"Its revenue, Ebitda and PAT has grown at a CAGR of 26.3 per cent, 24.6 per cent and 50.9 per cent, respectively over FY22-24 period. The company makes a relatively better EBITDA margin and similar PAT margin as compared to its major peer Dmart. We recommend investors to subscribe to the issue at a cut-off price for the long term," it said.
Swastika Investmart Rating: Subscribe with caution Vishal Mega Mart is a leading online retailer, with strong market position in India. The company has consistent financial performance with growing revenue and profitability. Also, the valuations are reasonable. However, It is a complete OFS and the company shall not receive any proceeds from the issue, said Swastika Investmart, suggesting high-risk investors to bid for it.
Choice Broking Rating: Subscribe for long term Vishal Mega Mart's majority revenue comes from their own brand. As of FY24, the company holds a major portion of its store in north India followed by east India and having future plans of expanding in west and south India. Over the years, the company’s top and bottom line has been steadily increasing, said Choice Broking.
"The company has seen a steady growth in its top and bottom line because of the increase in number of stores and also because of its own brand sales which positively impacts the margins. Over the years, the company has shown a good hold in its inventory and working capital management, which gives a sustainable outlook for the long term," it said with 'subscribe for long-term' rating.
Mehta Equities Rating: Subscribe Given the plans to tap into cities with populations over 50,000 and strengthen its existing footprint, Vishal Mega Mart is poised to capitalize on India’s expanding urbanization and retail trends, said Mehta Equities. "The steady increase in store count across key geographies further supports the scalability of its business model. Hence, we recommend to 'subscribe' to the IPO for long-term."
Hensex Securities Rating: Subscribe Vishal Mega Marts operates a pan-India network of 645 stores across 33 Tier 1 cities and 381 Tier 2 cities and beyond, as of September 30,2024. The Company has 133.82 million customers registered under the loyalty program as at September 30, 2024, said Hensex Securites. "We recommend investors a 'subscribe' to the issue for listing gains as well as for long term," it said.
SMIFS Rating: Subscribe "We recommend subscribe to the issue as a long term investment as the expansion into Tier II cities and hyperlocal delivery service aids growth coupled with rising per capital income in the country. While some risk could emanate from the diversification into the Western parts of the country," said SMIFS.
Ashika Stock Research Rating: Subscribe Vishal Mega Mart aims to drive same-store sales growth through several complementary initiatives including expansion of the product portfolio, expansion of hyperlocal offering, leveraging technology and data obtained from its loyalty program, and enhancing the in-store experience at the stores, said Ashika Stock Research.
"In terms of the valuations, on the higher price band, it demands P/E multiple of 69.2 times post issue H1FY25 annualized EPS and EV/Ebitda multiple of 28.1 times. Hence, it is recommended to 'subscribe' rating the issue from the long-term perspective," it said.
Anand Rathi Research Rating: Subscribe for long-term Vishal Mega Mart is focused on serving a large and fast-growing section of the Indian population with Consumer-centric approach resulting in a loyal consumer base and diverse and growing portfolio of own brands with pan-India presence along with technology enabled, systems driven operations, said Anand Rathi.
"At the upper price band, the company is valuing at P/E of 67.83 times, with an EV/Ebitda of 28.1 times and market cap of Rs 35,168 crore post issue of equity shares and return on net worth of 8.18 per cent. We believe that the IPO is fairly priced and recommend a 'subscribe for long term' rating to the IPO," it added.
KR Choksey Finserv Rating: Subscribe Vishal Mega Mart stands out as a prominent player in the value retail segment. The company showcases strong growth potential, driven by a 26 per cent revenue CAGR (FY22-FY24), consistent Ebitda margins of 14 per cent, and a well-balanced cat Its 14 per cent SSSG underscores its operational efficiency and strong customer demand, said KR Choksey.
"The projected valuation metrics, including a PE of 76 times and EV/Ebitda of 29 times, 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," it said.
Sushil Finance Rating: Subscribe for long term Vishal Mega Mart has a significant potential for further expansion of pan India store network. Also, with proven track record of the financials and a strong focus on technology-driven operations and potential growth of retail sector, the company is positioned to benefit from the growing demand of affordable daily use products, said Sushil Finance with 'subscribe for long-term tag.
AUM Capital Rating: Subscribe for long term Vishal Mega Mart is on the fast growing super market retail chain stores in India. Rising disposable income and a preference for quality and hygienic products amongst the population gives established companies like VMMT an edge over the unorganized sector as well as stiff competition to other established branded retails chains. Healthy financials and a debt free status gives it an impetus, said AUM Capitla with a 'subscribe' for long-term rating.