Ashish Kacholia-Backed Stock Gets Buy Call For 22% Potential Upside: Do You Own?

With a market valuation of Rs 3,944.87 Cr, Aditya Vision Ltd (AVL) is a small-cap company in the consumer discretionary industry. Run by first-generation businessman Mr. Yashovardhan Sinha, Aditya Vision (AVL) is a contemporary multi-brand consumer electronics retail network with its headquarters located in Patna (Bihar). It began as a single retail location in 1999 and as of September, it had 130 outlets.

Although the stock has produced a multibagger return of 113.35% YTD, Nuvama Institutional Equities, a brokerage firm, believes there is still room for growth in the stock. As a result, the brokerage has set a target price of Rs 4,002, which suggests a potential upside of 22% from the current market price of Rs 3279.60.

"AVL aims to densify its store network in existing clusters and selectively enter new markets, providing long-term growth opportunities. It can continue to grow rapidly, aided by the opportunities offered by the targeted geography such as underpenetration of various consumer durable products, an improvement in the power situation, higher disposable incomes, widely available financing schemes, and a possible increase in market share due to its strong brand image among locals. The benefits of scale can continue to flow as many of the added stores are yet to mature," the brokerage said in a note.

"The power situation in Bihar has improved considerably. Installed power capacity in Bihar has grown 4x over FY12-22. This boosted demand for electronic appliances and devices in Tier III and IV cities as well as villages, which benefited players such as AVL. Moreover, increased smartphone usage and internet penetration in urban and rural areas aided growth," the brokerage stated.

"The over two-decade experience of the promoter in the electronics retail industry, strong understanding of market dynamics, its healthy relationships with branded partners, and ability to connect with the local population, has enabled a steady ramp up in its scale of operations.

With improving scale, prudent working capital management is critical for the sustenance of healthy operating metrics over the medium term. We expect a revenue/ EBITDA/PAT CAGR of 25%/24%/25% over FY23-26E, with a steady EBITDA margin of 10%. At the CMP, the stock is trading at 31.6x/16.8x FY26E earnings/EBITDA. Given the steady earnings visibility, we initiate coverage with a 'BUY' rating and value the stock at INR4,002 (38x FY26E earnings)," Nuvama Institutional Equities said in a note.

The shares of Aditya Vision reached a 52-week-high of Rs 3,474.90 on (05/12/2023) and a 52-week-low of 1,251.65 on (17/04/2023). During Q2FY24, the company reported promoters shareholding of 61.19%, FIIs stake of 0.56%, DIIs stake of 4.60% and public stake of 33.65%. As per the shareholding pattern of Aditya Vision for the July to September 2023 quarter, ace investor Ashish Kacholia held 2,39,506 shares or a 1.99% stake in the company.

Disclaimer

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