Axis Securities
Target: ₹4,180
CMP: ₹3,883.40
V-Mart is an omni-retail store chain, operating pan-India, but mainly concentrated in Uttar Pradesh, Bihar and Jharkhand, which account for about 50 per cent of its store count of 467 stores. It also serves customers through its direct-to-consumer (D2C) omni-channel platform, www.limeroad.com (LimeRoad), besides other marketplaces.
Despite a challenging environment, the management highlighted that the consumption trends in the core markets will start picking up, particularly in tier-III and IV towns led by strong festival/wedding season and the government’s impetus on rural development/infra spending. V-Mart reported a 20 per cent annual growth in revenue during Q2FY25. We expect V-Mart to report healthy performance in H2FY25.
In November 2022, V-Mart acquired LimeRoad, which initially put pressure on its balance sheet. Since then, the company has been working to reduce LimeRoad’s losses. In Q2FY25, LimeRoad losses reduced 63 per cent year on year. V-Mart targets break-even for LimeRoad in FY25, which is likely to drive margins in the coming quarters.
Value players like V-Mart are expected to see earnings and profitability improvement as rural areas and small towns recover and outpace the metros. This recovery, coupled with market share gains from smaller and unorganised players, is expected to drive their performance.
We recommend a BUY rating with a near-term TP of ₹4,180/share, implying an upside of 10 per cent from the CMP.