6 days ago
Motilal Oswal Favors Value Fashion, Sees Vishal Mega Mart Upside
Motilal Oswal studied inexpensive clothing stores in India.
It found that shoppers continued buying from these stores even when family budgets were under pressure.
The four retailers grew their sales by about 25% compared with the same period a year earlier.
They also opened many new stores across the country.
V-Mart and Vishal Mega Mart improved their operating profit margins more than the group overall.
Motilal Oswal believes shoppers in smaller cities increasingly want organized stores with many products.
It thinks private-label products and rising consumer aspirations could help these companies grow.
However, higher wages and raw-material costs could make business more expensive.
The brokerage believes the retailers can manage these challenges through better sourcing, product changes and selective price increases.
Motilal Oswal set a target of Rs 975 for V-Mart Retail, implying roughly 13% upside.
The brokerage set a Rs 165 target for Vishal Mega Mart, implying nearly 50% upside.
Four listed value fashion retailers recorded about 25% year-on-year revenue growth in Q1 FY27.
The retailers opened 107 net new stores, taking their combined network beyond 2,000 outlets.
Motilal Oswal expects high-teens revenue CAGR for V-Mart and Vishal Mega Mart through FY26-29, though raw material and wage inflation remain risks.
- Who
- Motilal Oswal, V-Mart Retail, Vishal Mega Mart and three other listed value fashion retailers.
- What
- Motilal Oswal issued a positive assessment of value fashion retailers and set target prices for V-Mart Retail and Vishal Mega Mart.
- Where
- India, including Tier 2, Tier 3 and Tier 4 cities.
- When
- The performance discussed covers April to June 2026, the first quarter of FY27.
- Why
- The brokerage cited resilient demand, revenue growth, improving profitability, store expansion and the shift toward organized retail in smaller cities.
Bullish brokerage view
Near-term risks
Growth outlook
Bullish brokerage view
Motilal Oswal expects value fashion retailers to benefit from organized-retail adoption, private-label penetration and rising aspirations in smaller cities.
Near-term risks
Raw-material and wage inflation could weigh on profitability and require retailers to rely on sourcing efficiencies, product-mix changes and price increases.
Store expansion
Bullish brokerage view
The brokerage said store economics remain healthy, new stores are ramping up faster and newer regions are achieving productivity comparable with mature markets.
Near-term risks
The retailers are accelerating rollouts while facing inflationary pressure, creating a need for continued cost control and disciplined expansion.
Key facts
- V-Mart Retail target
- Rs 975, implying roughly 13% upside according to Motilal Oswal.
- Vishal Mega Mart target
- Rs 165, implying nearly 50% upside according to Motilal Oswal.
- Revenue growth
- The four listed value fashion retailers recorded around 25% year-on-year growth in Q1 FY27.
- Store additions
- The retailers opened 107 net new stores during the quarter.
- Combined footprint
- Their network exceeded 2,000 stores and 25.5 million square feet of retail space.
- EBITDA margin
- Aggregate pre-Ind AS EBITDA margin improved by 10 basis points to 9%.
- Key risks
- Raw-material and wage inflation could pressure retailers' costs.
Quotes
Motilal Oswal
Indian domestic brokerage house covering value fashion retailers
“Operating leverage and tighter cost-control measures offset the impact of minimum wage hikes and GM contraction.”
financialexpress.com
“Demand momentum remains healthy, profitability continues to improve.”
financialexpress.com
Sources
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