Company Update - V-Mart - ICICI Direct

We attended the V-Mart conference call with regard to its acquisition of 'Unlimited' store brand from Arvind Fashions. The key highlights of the same are mentioned below:

- V-Mart has signed definitive agreements to acquire 74 existing stores from Arvind Lifestyle Brands, a subsidiary of Arvind Fashions, for a cash consideration of Rs. 150 crore. The company will also make some contingent payments (2% of revenue in first two years and 1% of revenue in the third year) based on achievement of certain revenue related milestones

- V-Mart is one of the strongest players in value fashion in the northern and eastern region, primarily operating in tier II/III cities. It operates on a cluster based philosophy and did not have a presence in southern India. With the acquisition of 'Unlimited' store brand from Arvind Fashions it will be able to have another 74 stores in its portfolio and cater to the fashion needs of family in western and southern markets of India

- V-Mart is likely to continue its one nation one brand strategy. However, they may decide further course of action depending on customer response. V-Mart currently has 282 stores and post this acquisition the store network would increase to 356 stores with presence in 229 cities

Key triggers for future price performance

- Factoring in the acquisition, we increase our FY22E-23E EBITDA estimates by 6-10%, respectively

- We like V-Mart as a structural long term story to play the unorganised to modern retail shift. We pencil in revenue, EBITDA CAGR of 62%, 66%, respectively, in FY21-23E (on favourable base)

- Robust liquidity position (Rs. 415 crore as on FY21) to fund capex requirements and investments towards 'Unlimited' format

For details, click on the link below: Link to the report

Shares of V-MART RETAIL LTD. was last trading in BSE at Rs. 3280.1 as compared to the previous close of Rs. 3355.75. The total number of shares traded during the day was 2499 in over 939 trades.

The stock hit an intraday high of Rs. 3420 and intraday low of 3243.9. The net turnover during the day was Rs. 8359971.

Source : Equity Bulls

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