6 VMART share price target reports by brokerages below. See what is analyst's view on VMART share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
After languishing for the last 12 months due to weak earnings, the stock has bounced back recently on the back of healthy earnings growth in 3QFY20. We have turned positive on the stock on account of three factors (i) moderating competition given ongoing consolidation in the regional market, which offers potential for market share gains, (ii) low SSSG and margin base for the last five quarters (except 3QFY20), coupled with tailwinds from better monsoon and agricultural output and (iii) huge runway for growth in the regional market. The stock has corrected by ~32% from its peak in Aug’18 due to deceleration of PAT growth (9% CAGR) over FY18-20. However, the improving prospects (PAT CAGR of ~23% over FY20-22E) will help garner better valuation. We assign 20x EV/EBITDA on FY22E EBITDA of INR2.3b to arrive at a target price of INR2,700 with implied P/E of 28x (closer to its five-year average, but at a ~30% discount to its three-year average). We upgrade the stock to Buy.
The twin effect of strong fundamentals and business inclined an in tune with the current macros, we believe the company will be able to sustain the premium valuations. The stock trades at a 1 year fwd P/E of 39x and we value the stock at 50x (near avg+1sd valuation on 5 year avg), on FY21 E EPS of Rs. 51.3 and retain our ‘HOLD’. Key risks to the call are further deteriorations in macros having a deeper impact and increased competitions from organized space from urban India.
Indian retail industry is expected to witness a growth of 12% – 14% over the next three years and reach about $1150 bn by 2021; CAGR growth of over 10% during 2013 – 18 (Source: CARE Ratings). Higher demand from consumers, improved standard of living, brand awareness and more private labels with retailers, to name a few, are expected to stimulate demand going forward. India is currently the fourth-largest global destination in the retail space, after US, China and Japan. Entry of large number of players, along with rising income levels, favorable demographics and easy credit availability have made the retail industry one of the most dynamic and fast growing industries in the country.
Compelling story; maintain ‘BUY’.V-Mart’s strategy of increasing clusters coupled with healthy store additions is likely todrive growth. Key risks to our call are rise in competitive intensity and prolonged slowdown. We retain 25x EV/EBITDA (12-months’ forward; ex-Ind AS 116) to arrive at TP of INR2,366. Maintain ‘BUY/SP’. At CMP, the stock is trading at 14.1x FY21E EV/EBITDA (19.1x ex-Ind AS 116 FY21E EV/EBITDA).
Despite good set of numbers and efforts taken to improve profitability, webelieve in the coming quarters, the stress witnessed in the smaller cities will have an impact on the overall performance. The very high growth seen in the company in the earlier years has now more or less normalized now and is being factored in the valuations also. The stock currently trades at one year forward PE of 41x. We value the stock at 37x, a marginal premium to the 5 year average 1 year forward P/E of 35x, on FY21E EPS of 50.5 and arrive at a target price of Rs. 1870. Risk to the call is faster than expected recovery in the rural market.
Continued expansion bets on market share gain; margin soft V-Mart Retail or VRL’s1QFY20 performance on the revenue front exceeded our expectations but fell short on margins. After a very relatively weak 4QFY19, VRL’s revenue bounced back and grew by 26% YoY (driven by Eid sales, ~27% increase in retail area and no growth in revenue per sqft).1QFY20 same-store sales growth (SSG) was 5%, driven by 6% volume growth. Management is aiming for a full year SSG of 5%-8% and EBITDA margin of ~9% along with 20% plus revenue growth. On the balance sheet side there has been good inventory control with inventory days reducing by 10 days on YoY basis. Post 1QFY20, we have tweaked our estimates. We now expect a faster growth in revenue while we have pared margin estimates. Our EPS for FY20/FY21 gets pared by 13%/9%, respectively. We assign a target price (TP) of Rs2316, based on a PE multiple of 36, the mean multiple for the last 5 years. Due to the sharp correction that the stock has seen we change our recommendation to a Buy from an Accumulate earlier.
Currently, the stock trades at one year forward P/E of ~65x. The valuation build up was on the expectation of gaining market share in the unorganized space in smaller cities. Management’s admittance to have not been able to scale up business in these regions amidst a slowdown and competitive market is a cause for concern. Also, high concentration of stores in North and North East pose additional risk. We value the stock at 43x on FY21E EPS of Rs. 47.2, and recommend “SELL”, with a target price of Rs. 2032. Risk to the call is faster than expected recovery in rural market.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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