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.