Buy into Vishal Mega Mart to grow with Bharat's consumption story
The public issue is aimed at giving a partial exit to Kedaara Capital, which will dilute the private equity promoter's stake to 76% from 96.5%. Since it is an OFS, the company will not get any proceeds from the share sale.
Business: The Gurugram-based company runs a network of more than 645 stores across 414 cities, selling apparel, general merchandise and FMCG. It earns about 48% of revenue from apparel, 28% from general merchandise and 23% from FMCG. While FMCG brings in the footfalls, apparel and general merchandise are the more profitable and value-accruing categories for the company. Uttar Pradesh, Karnataka and Assam are the top three contributing states to its overall revenue. The retail chain posted double-digit same-store sales growth across categories in FY24 with a growing portfolio of its own brands. It achieved the majority of sales from its own brands in apparel besides raising the share of its own brands in general merchandise and FMCG segments.
Financials & Growth Prospects: Vishal Mega Mart's revenue recorded a 26% compounded annual growth rate (CAGR) to ₹8,911 crore in FY24 from ₹5,588 crore in FY22. Similarly, net profit rose 51% CAGR to ₹462 crore in FY24. The Ebitda margin for FY24 stood at 14% with adjusted return on capital employed (ROCE) at 71%.
The company has a track record of profitable and capital-efficient growth. As much as 70% of its stores are in tier II cities and beyond, which have low organised retail store densities and where consumers gravitate towards products that are
