It noted that Indian value retail is highly polarised between apparel players struggling with footfall consistency and grocers grappling with structural margin dilution.
Vishal Mega Mart (VMM) effectively extracts the best attributes of both models while neutralizing their respective weaknesses. Driven by its diversified mix (apparel ~44%, FMCG ~28%, and GM ~28% in FY25), VMM uses high-frequency FMCG as a hook to drive daily footfalls, effectively cross-selling captive shoppers into its higher-margin apparel and GM categories, the brokerage noted.
“We project ~18/21% revenue/EBITDA CAGR over FY26-28, with Pre-IND-AS EBITDAM expanding to 10.3%, largely driven by SSSG-led operating leverage. Supported by an asset-light, zero-debt balance sheet, PAT is expected to grow at ~26% CAGR, elevating Pre-IND-AS RoICs to ~18% (from ~13% currently) by FY28,” the brokerage added.
HDFC Securities noted that FY26 ROIC (ex-goodwill) stands at ~49%. It initiated coverage with a BUY rating and a DCF-based TP of Rs 130/sh, implying 44x FY28 EPS.
