Motilal Oswal Suggests Buying This Stock For 35% Return, In Near Term

Brokerage firm Motilal Oswal suggests buying the stocks of V-MART for 35% return. After acquiring 74 stores of "Unlimited" from Arvind Fashion, VMart aims to achieve profitability.

Target Price

The Current Market Price (CMP) of V-MART is Rs. 7277. Motilal Oswal has estimated a Target Price for the stock at Rs. 9250. The stock is expected to offer a 35% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 3306
Target Price	Rs. 4450
1 year return	35.00%

Company performance

In FY22, V-MART's sales are expected to be at Rs. 17.3 billion, and in FY23 it is expected to be at Rs. 26.2 billion. In FY22, V-MART's EBITDA is expected to be at Rs. 2 billion, and in FY23 it is expected to be at Rs. 3.5 billion. The company's 'Unlimited' stores are currently operating at ~Rs. 7.2k/sq.ft. annually. This is 15% below V-Mart's pre-COVID levels. Store revenue is 15% below the pre-COVID level on an LTL basis. The company has reduced its employee cost by 30%.

Comments by Motilal Oswal

About the profitability of the stock, Motilal Oswal said, "While the improved throughput and profitability under 'Unlimited' value retail chain along with aggressive store additions are expected to drive steady growth for V-Mart, the sluggishness in rural markets witnessed in 3QFY22, as well as the adverse impact on demand due to the increase in prices, could remain the key overhangs that need to be monitored. We factor in 36%/46% revenue/EBITDA CAGR over FY22-24E, respectively. The company is targeting to achieve an EBITDA margin of 5-6%/7-8% in the near term/long term, respectively."

About the company

Founded in 2002, V-Mart is a family retail store chain offering apparel, footwear and accessories for men, women, and kids. The company also offers a wide range of home furnishings, general merchandise, toys, tableware, utensils, and other home utility items. The rich expertise of 17 years in delivering high-quality affordable fashion, coupled with a wide network of 200+ stores across 171 towns in 17 states.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.