Buy V-Mart Retail; target of Rs 1208: Anand Rathi

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Lower Limeroad losses, greater operational efficiencies and better offline margins drove a 166bp y/y higher EBITDA margin to 14.3% (~200bps above ARe and consensus). SSSG was 1%, hurt by advance Eid sales, an early monsoon and market sluggishness. Vmart’s apparel ASP grew 2%. However, Unlimited’s fell 3% led by focus on more value offerings. 13 net stores were added, with plans to add 65 net in FY26. Inventory days improved 5% y/y to 93 days; per store inventory rose slightly but was healthy. Management expects mid to high single-digit SSSG in FY26 and better absolute EBITDA, though margins are likely to be range-bound. Better products, sharper pricing, enhanced product display, supply-chain efficiencies and tech integration/ adoption would drive margins. Our FY26e/27e revenue remains unchanged while our EBITDA is 4.8% higher on avg. on consecutively better offline margins in the last few quarters. We expect ~17%/22% revenue/EBITDA CAGRs over FY25-28 while our PAT CAGR is higher at ~77% on a lower base.

Lower Limeroad losses, greater operational efficiencies and better offline margins drove a 166bp y/y higher EBITDA margin to 14.3% (~200bps above ARe and consensus). SSSG was 1%, hurt by advance Eid sales, an early monsoon and market sluggishness. Vmart’s apparel ASP grew 2%. However, Unlimited’s fell 3% led by focus on more value offerings. 13 net stores were added, with plans to add 65 net in FY26. Inventory days improved 5% y/y to 93 days; per store inventory rose slightly but was healthy. Management expects mid to high single-digit SSSG in FY26 and better absolute EBITDA, though margins are likely to be range-bound. Better products, sharper pricing, enhanced product display, supply-chain efficiencies and tech integration/ adoption would drive margins. Our FY26e/27e revenue remains unchanged while our EBITDA is 4.8% higher on avg. on consecutively better offline margins in the last few quarters. We expect ~17%/22% revenue/EBITDA CAGRs over FY25-28 while our PAT CAGR is higher at ~77% on a lower base.