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Vishal Mega Mart shares have a 55% bull case upside, Motilal Oswal saysAmong the 12 analysts that have coverage on Vishal Mega Mart, nine have a "buy" rating, two have a "hold" rating and one has a "sell" rating.By Shloka Badkar   July 16, 2025, 8:40:33 AM IST (Updated)3 Min ReadShares of Vishal Mega Mart Ltd. can rise over 20% from current levels as per brokerage firm Motilal Oswal Financial Services, as its initiation note on the stock on Wednesday, July 16, cited it to be a play on the rising aspiration in tier-2+ towns in India.

Motilal Oswal initiated coverage on Vishal Mega Mart with a "buy" rating and a price target of ₹165 per share. This comes after the stock has already risen 75% from its issue price of ₹78 per share.

The brokerage has a bull case price target of ₹210 on Vishal Mega Mart, which implies further 55% upside from current levels. This assumes a 22.5% Compounded Annual Growth Rate (CAGR) for its revenue, over financial year 2025-2028. The bull case also assumes margin improvement to levels of 15.2%, which is 50 basis points higher than their financial year 2028's base case scenario.

On the flip side, Motilal Oswal has a bear case target of ₹120, which indicates a potential downside of 12% from Tuesday's close.

Long runway for growth

According to the note, India's tier 2+ towns account for 74% of India's retail spends, which remains largely dominated by the unorganised retail players.

However, rising brand awareness, store expansion by organised retailers and greater focus on better quality products have led to a market shift towards organised, one-stop shopping destinations, even in semi-urban and rural India.

The brokerage added that Vishal Mega Mart is a play on rising consumption and aspiration in Tier-2 and beyond India.

Unique retailer

As per Motilal Oswal, Vishal Mega Mart is a unique retailer because:

It has a strong presence in tier 2+ cities, with 696 stores in 458 cities

The company has well-diversified exposure to key consumption baskets such as apparel (44%), general merchandise and FMCG (28%)

A strong and affordable private brands portfolio, with 73% revenue share

One of the lowest cost structures in the industry

The brokerage said it believes the company's uniqueness provides it with a strong moat against intense competition from both offline and online value retailers.

Motilal Oswal expects Vishal Mega Mart's revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA) to grow at a compounded annual growth rate (CAGR) of 19% and 20%, respectively. The same is likely to be driven by 13% CAGR in store additions, consistent double-digit same store sales growth (SSSG) and modest operating leveraging benefits, the brokerage said.

Key risks 

As per Motilal Oswal, these are the key risks and concerns for the stock:

Dependence on third-party vendors for manufacturing own brands, which make up 73% of its revenue share

Rising competition from other offline and online value retailers

Inflationary risks and inability to pass on price hikes

Sales concentration in select states

Follow-on stake sales from promoters, private equity-backed, and a lack of clarity on long-term ownership

Of the 12 analysts that have coverage on the stock, nine have a "buy" rating, two have a "hold" rating and one has a "sell" rating.

Vishal Mega Mart shares have also been purchased by funds like HDFC MF and Kotak MF in the month of June, according to a Nuvama Alternative & Quantitative Research report. As of the June 2025 quarter, India's Mutual Funds held a 25.69% stake in Vishal Mega Mart, according to the shareholding pattern uploaded on the BSE.

Shares of Vishal Mega Mart ended the previous session 0.38% lower. The stock has gained 28.95% this year, so far.

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Continue ReadingFirst Published: Jul 16, 2025 8:30 AM ISTCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsbrokerageMotilal OswalMotilal Oswal Financial Servicesshare market todayVishal Mega Mart