Both brokerages have “buy” ratings on the stock and see upside potential of 44% and 51% respectively on the hypermarket chain.
HSBC
HSBC has a “buy” rating and a target price of ₹153 per share. This indicates an upside of 44.3%
HSBC noted key highlights from the analyst meet.
It said for the apparel segment, the company discussed the launch of a new format called Beyond & Co, with an average selling price of around ₹900 and its process, execution and inventory selection is what differentiates the firm from its peers. The company’s apparel segment remains a fast fashion focused collection.
With regards to general merchandise, HSBC said private label share varies across sub-segments with highest in home furnishings at around 35%. The company intends to expand the range in toys.
Lastly, for the FMCG segment, the brokerage said private label penetration is more or less covered in most categories across HPC and foods. Gross margins for private labels are around two times of third-party brands, it said.
While the second quarter of this fiscal could see some moderation in performance due to the festive shift, the brokerage expects Vishal Mega Mart’s full-year performance to be unchanged.
Jefferies
Jefferies has a “buy” rating on the stock and a target price of ₹160 per share. This indicates an upside of 51% from its previous close.
The brokerage said the company showcased its mid-level management alongside its CEO for the first time.
It said the company’s value-for-money playbook is evolving with rising aspirations. The management sees a long growth runway via store expansion, refurbishments, private labels and quick commerce, while new formats expand total addressable market.
Despite the heavy investments in tech, supply chain and automation, the company’s strong volumes and sourcing advantages underpin confidence in sustaining margins, Jefferies added.
Stock reaction
A total of 21 analysts have coverage on the Vishal Mega Mart stock. Of them, 20 have “buy” recommendations and one has a “sell” rating.
Shares of Vishal Mega Mart are trading 0.6% lower on Thursday at ₹105.45. The stock is down 22% so far this year.
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