The brokerage has a bull case price target of ₹210 on Vishal Mega Mart, which implies further 55% upside from current levels. This assumes a 22.5% Compounded Annual Growth Rate (CAGR) for its revenue, over financial year 2025-2028. The bull case also assumes margin improvement to levels of 15.2%, which is 50 basis points higher than their financial year 2028’s base case scenario.
On the flip side, Motilal Oswal has a bear case target of ₹120, which indicates a potential downside of 12% from Tuesday’s close.
Long runway for growth
According to the note, India’s tier 2+ towns account for 74% of India’s retail spends, which remains largely dominated by the unorganised retail players.However, rising brand awareness, store expansion by organised retailers and greater focus on better quality products have led to a market shift towards organised, one-stop shopping destinations, even in semi-urban and rural India.
The brokerage added that Vishal Mega Mart is a play on rising consumption and aspiration in Tier-2 and beyond India.
Unique retailer
As per Motilal Oswal, Vishal Mega Mart is a unique retailer because:
- It has a strong presence in tier 2+ cities, with 696 stores in 458 cities
- The company has well-diversified exposure to key consumption baskets such as apparel (44%), general merchandise and FMCG (28%)
- A strong and affordable private brands portfolio, with 73% revenue share
- One of the lowest cost structures in the industry
The brokerage said it believes the company’s uniqueness provides it with a strong moat against intense competition from both offline and online value retailers.Motilal Oswal expects Vishal Mega Mart’s revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA) to grow at a compounded annual growth rate (CAGR) of 19% and 20%, respectively. The same is likely to be driven by 13% CAGR in store additions, consistent double-digit same store sales growth (SSSG) and modest operating leveraging benefits, the brokerage said.
Key risks
As per Motilal Oswal, these are the key risks and concerns for the stock:
- Dependence on third-party vendors for manufacturing own brands, which make up 73% of its revenue share
- Rising competition from other offline and online value retailers
- Inflationary risks and inability to pass on price hikes
- Sales concentration in select states
- Follow-on stake sales from promoters, private equity-backed, and a lack of clarity on long-term ownership
Of the 12 analysts that have coverage on the stock, nine have a “buy” rating, two have a “hold” rating and one has a “sell” rating.
Vishal Mega Mart shares have also been purchased by funds like HDFC MF and Kotak MF in the month of June, according to a Nuvama Alternative & Quantitative Research report. As of the June 2025 quarter, India’s Mutual Funds held a 25.69% stake in Vishal Mega Mart, according to the shareholding pattern uploaded on the BSE.
Shares of Vishal Mega Mart were up 1.27% at 138.87 apiece at 9.50 am on Wednesday, July 16. The stock has gained 31.12% this year, so far.
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