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V-Mart Retail Q4 Results Review - Weak Performance, Recovery In Sight: Dolat Capital

Cautiously optimistic outlook on demand, May seeing signs of recovery.

<div class="paragraphs"><p>V-Mart Retail outlet. (Source: Company's official FB page)</p></div>
V-Mart Retail outlet. (Source: Company's official FB page)

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Dolat Capital Report

  • Vmart’s Q4FY23 was below our estimates but in-line with street. Internals were healthy 17 (net 9) store additions, 10% SSSG, improvement in footfalls, better profitability from new and acquired Unlimited stores. 

  • Vmart’s recovery post covid has been lackluster, due to steep inflation and weak consumer sentiment, increase in competition from national players, impact of steep price increases by during covid which stands corrected etc. Acquisition of Lime Road (Q2FY23), investments in new warehouse (~Rs 1.5bn over FY22-23), technology spends and continued store expansion, though positive from a longer-term future proofing of business, these initiatives have accentuated the P&L and BS pain. That said, the concerns seem to have been factored in the price. As core business recovers and above initiatives deliver over medium-term, healthy performance is likely. 

  • We decrease our revenue estimates by 5/2% and EBITDA by 16/2% over FY24/25E to factor the weak Q4FY23 performance and delay in recovery. Reiterate BUY with revised TP of Rs 3,200 @ 18x FY25E EV/E (earlier Rs 3,350 @ 18x FY25E)

V-Mart Retail (Q4FY23 Result Update)_22-May-23.pdf
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