Planning to increase retail space by 20-25% each year: V-Mart Retail

Update on the Indian Equity Market:
On Monday, NIFTY closed in slight green at 12,926 (-0.5%). Top gainers in NIFTY50 were ONGC (+6.6%), IndusInd bank (+3.8%) and GAIL (+3.54%). The top losers were HDFC (-3.5%), ICICI bank (-2.5%) and Axis Bank (-1.8%). Top sectoral gainer was IT (+2.8%), PHARMA (+1.8%) and METAL (+1.2%) and sectoral losers were FIN SERVICE (-1.1%), BANK (-0.7%) and PVT BANK (-0.3%).

Excerpts of an interview with Mr Lalit Agarwal, Chairman & MD – V-MART Retail with CNBC dated 20th November 2020:
• They have been consistent in their store size and their store plan. The expansion plan continues and they would definitely want to open up more stores in the current and the next year.
• They have initiated their Omnichannel portal and have started getting good traction there.
• The traction was more during the lockdown in the months of April-June but right now when markets have opened up, people are once again going back to their normal brick and mortar physical shopping behaviour.
• V-Mart Retail is very bullish on weddings. They expect good wedding consumption to happen up to December 14. They have been seeing around 75 per cent or more than that (of sales) over the last year’s festival.
• It was more than 70 per cent growth on a month-on-month (MoM) basis. Even during rush hour, customers came in good numbers.
• They are also seeing basket value going up as customers don’t want to visit the store multiple times, so they are coming in and buying a little better quantity.
• V-Mart saw good growth in the festive season. The density of customers in the store was a little higher and so was the fear. However, it has definitely been much better than what it was in the last month.
• October saw more than 70% growth than September. Early November and the end of October have been better as far as the festive season is concerned.

Consensus Estimate: (Source: market screener and investing.com websites)
• The closing price of V-Mart Retail Ltd was ₹ 2,042/- as of 23rd November 2020. It traded at 52x/ 35x the consensus earnings estimate of ₹ 39.1/ 57.9 for FY22E/23E respectively.
• The consensus price target of INDIAMART Ltd is ₹ 1,958/- which trades at 34x the earnings estimate for FY23E of ₹ 57.9/-
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