Improved productivity and margin expansion led re-rating on the cards
With basic needs in rural India being fulfilled through government initiatives, such as free food schemes and cash handouts for women, disposable incomes have risen, driving growth in aspirational spends that benefits value fashion retailers. V-Mart remains a key beneficiary of the unorganized-to-organized shift and rising preference for one-stop shops in tier 2+ towns in India. We expect V-Mart to deliver a robust ~18% revenue CAGR over FY25-28, driven by consistent ~13% annual store additions and mid-single-digit SSSG. Further, with a significant reduction in LimeRoad (LR) losses, improving productivity of new Unlimited stores, cost efficiency measures, and operating leverage, we expect ~290bp expansion in pre-INDAS EBITDA margins to reach ~7.2% by FY28, driving ~39% CAGR over FY25-28. Despite strong growth and margin expansion potential, V-Mart trades at a modest ~19x FY27 pre-INDAS EV/EBITDA (vs. 40x for VMM). We reiterate our BUY rating on V-Mart with a revised TP of INR1,040, premised on 23x Dec’27E pre-INDAS 116 EV/EBITDA (implies ~12x Dec’27 EBITDA and ~39x Dec’27 EPS). Our scenario analysis indicates compelling risk reward (bull case: INR1,250; bear case: INR685). V-Mart is among our top picks in the retail sector for 2026.
