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HDFC Research
V-Mart Retail (Buy)
CMP: ₹537.50
Target: ₹576-643
V Mart Retail Ltd founded in 2002, is a complete family fashion store in India, primarily engaged in retail of fashion products. The company has strong presence in North, East and West through 108 retail stores, spread across 91 cities in 12 States and Union territory with a total retail area of 8.63 lakh square feet. The company is expanding its footprint through company model strategy and not franchise model business.
Investment rationale: a) Benefitting from early mover advantage in the cities present in. b) Compare to its peers, has efficient control over costs. c) Implementing cluster based approach in setting up stores. d) Same store sales growth remains healthy despite slowdown and online threat. E) Marginal D/E ratio and healthy operating cash flow to support growth and return ratios. e) To add 50 stores in next couple of years. Concerns: a) E-retailing a big threat. B) Competition by local niche players. c) Inability to manage working capital and presence in limited States.
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