V-Mart Retail - 4QFY21 results first cut - YES Securities

In-line performance, setting up base for strong growth post unlock

View - While the current pandemic environment remains the key near-term risk for the company, we believe the company is in a strong position to aggressively expand its store footprint by 25% every year, service them efficiently from its new warehouse, in addition to strengthening its digital/omni-channel capabilities post the recent equity raise of Rs 3.75bn. We expect continued market share gains for the company once the markets open up. We will review our estimates post the investor call and currently maintain our positive medium term view on the stock with a TP of Rs 3,089 based on 18x FY23E EV/EBITDA.

Result summary - Numbers were exactly in line with our estimates with revenue growth of 6% yoy, margin expansion of 110bps to 9.5% and a Net loss of Rs 15mn for the quarter.

Revenue growth - Recovery in sequential growth continued during the quarter but might have been impacted by the pandemic towards late March.

Margins - Gross margins improved by 130bps yoy to 29.8% indicating lower discounts and a better mix, while some normalization of operating costs offset savings in employee costs leading to EBITDA margin improvement of 110bps to 9.4%.

PAT - As expected, negative operating leverage drove a net loss, although the number was lower at Rs 15mn vs Rs 84mn last year.

Working capital - Lower than expected sales led to a temporary increase in inventory to 145 days of sales vs 105 days last year, which was partially offset by payables increasing from 32 to 46 days.

Shares of V-MART RETAIL LTD. was last trading in BSE at Rs.2759.15 as compared to the previous close of Rs. 2701.6. The total number of shares traded during the day was 4104 in over 952 trades.

The stock hit an intraday high of Rs. 2800 and intraday low of 2653.05. The net turnover during the day was Rs. 11327027.

Source : Equity Bulls

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