21 hours ago
Vishal Mega Mart's ₹8,000 crore Initial Public Offering (IPO) opens for subscription on Wednesday, December 11. The entire issue is an Offer for Sale, which means that the company will not receive any proceeds from the issue.
Price band for the IPO has been fixed between ₹74 to ₹78 per share.
The issue closes for subscription on Friday, December 13.
So should you subscribe to this issue or avoid the same? Here is what analysts had to say:
AUM Capital recommends "Subscribe for the Long-term" to the IPO.
It said that rising disposable income and a preference for quality and hygienic products amongst the population gives established companies like Vishal Mega Mart an edge over the unorganised sector.
It also gives stiff competition to other established branded retail chains like Spencers and Reliance Smart Bazaar.
"Healthy financials and a debt free status gives it an impetus," the note further said.
KRChoksey Research also has a "Subscribe" rating for the IPO.
It said that while Vishal Mega Mart's sales per square feet at ₹701 may appear modest compared to industry benchmarks, it can be justified as it caters to middle and lower-middle-income groups.
The 14% same-store-sales growth underscores its operational efficiency and strong consumer demand.
Valuations too appear attractive, reflecting the strong growth trajectory and market positioning, the note said, adding that it is an attractive opportunity for long-term investors seeking to benefit from India's expanding organised retail market.
Choice Broking has a "Subscribe for Long Term" recommendation for the IPO.
While track record of delivering revenue, profit growth and capital efficiency are some key positives for the company, risks from leasing real estate for its operations, competition, revenue concentration and changing consumer preferences are some key risks.
Mirae Asset Sharekhan said that Vishal Mega Mart is one of the largest organised retail players in tier-2 and tier-3 cities.
At the lower and upper price band, the stock trades at 28 and 29 times its financial year 2024 Enterprise Value to EBITDA respectively, which is at a discount to close peers and large retailers in the value retail space.
It said that an increase in share of private own brands and store level efficiencies will aid in improving margins.
