Vishal Mega Mart shares could rise 55%: What Motilal Oswal’s bull case means
Published on 16/07/2025 12:38 PM
Motilal Oswal Financial Services Ltd (MOFSL) has initiated coverage on Vishal Mega Mart (VMM) with a ‘Buy’ rating and a target price of Rs 165, citing strong fundamentals, consistent growth potential, and a compelling risk-reward ratio. The valuation is supported by a discounted cash flow (DCF) model, with implied multiples reflecting a 4–7 per cent premium over the stock’s average trading levels since listing.
Vishal Mega Mart traded at Rs 137.50, up Rs 0.40 or 0.29 per cent as of 12:16 PM.
MOFSL forecasts a 19 per cent compound annual growth rate (CAGR) in revenue and 20 per cent CAGR in EBITDA from FY25 to FY28. Growth drivers include a 13 per cent CAGR in store additions, sustained double-digit same-store sales growth (SSSG), and moderate operating leverage.
The brokerage also expects a 24 per cent CAGR in profit after tax (PAT), supported by a debt-free balance sheet and stringent cost control. Vishal Mega Mart is projected to generate Rs 3,200 crore in cumulative operating cash flow and Rs 2,300 crore in free cash flow over the same period.
VMM operates 696 stores across 458 cities, with a focus on Tier-2 and smaller towns, giving it a unique edge in India's value retail segment. Its well-diversified portfolio—spanning apparel, FMCG, and general merchandise—has helped build strong market presence and brand loyalty.
MOFSL notes that private labels and low-price-point offerings continue to be VMM’s core strengths, helping it stand firm against both online and offline competitors.
Despite a 75 per cent rally in the stock since its IPO, MOFSL sees further upside potential. The brokerage has outlined a bull case target price of Rs 210, assuming faster store expansion and higher-than-expected SSSG, and a bear case target of Rs 120, reflecting more conservative growth assumptions.
Under the bull case, revenue CAGR is expected at 22.5 per cent, with EBITDA margins improving to 15.2 per cent till FY28 by 50 basis points above the base case.
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