Vishal Mega Mart Ltd IPO | News | Overview | Verdict

IPO listed on 18 Dec'24

Vishal Mega Mart Ltd

Minimum Investment

₹ 14,820 / 190 shares

Grey market premium

₹ 22 (28% premium)

Issue price

₹ 78

Listing price

₹ 104

Listing gains

26 (33%)

Listing on

Dec 18, 2024

Our Verdict:

Vishal Mega Mart Ltd (VMML) has demonstrated significant growth in revenue and profits in recent years and remains debt-free with liquid assets of Rs 686 crore as of September 2024. The company has consistently delivered healthy earnings and same-store sales growth, and is anticipated to continue this positive trend.
Targeting India’s growing middle and lower-middle-income segments, VMML operates 645 stores nationwide along with a mobile app and website. The company plans to expand further by opening new stores in Tier II cities, focusing on regions with populations exceeding 50,000, while strengthening its presence in existing markets. VMML’s robust operating cash flow of Rs 830 crore in FY24 will support its expansion plans.
In terms of valuation, the IPO appears reasonably priced with a P/E ratio of 76x based on FY24 earnings, which is notably lower than peers like Avenue Supermarts (D-Mart) and Trent. The valuation difference with Trent may be due to its stronger margins and return ratios. However, VMML trades at a substantial discount to D-Mart, despite having a superior growth track record and a comparable margin profile.
Considering its strong financials, debt-free status, competitive pricing, and widespread market presence, investors may subscribe to the IPO with a medium-to-long-term investment horizon.

About the company

Founded in

27 Mar'18

Managing director

Gunender Kapur

VMML is a leading one-stop retail destination for middle and lower-middle-income consumers in India. It offers a wide range of products across apparel, general merchandise, and FMCG through its own and third-party brands.
As of March 31, 2024, VMML ranks among the top three offline-first diversified retailers in India by retail space. It is also the fastest-growing in term of profit after tax (FY21-24) and among the top two in same-store sales growth for FY24.

STRENGTHS

Robust Financial Growth: VMML has demonstrated strong performance with operational revenue, EBITDA, and net profit achieving impressive compounded annual growth rates (CAGRs) of 26%, 25%, and 51%, respectively, from FY22 to FY24.
Improving Financial Metrics: Net profit margins have consistently improved from 3.63% in FY22 to 5.18% in FY24, while the Return on Capital Employed (RoCE) increased significantly from 56.43% to 68.76% over the same period.
Strong Market Presence: VMML boasts a robust pan-India network of 645 stores across 414 cities, spanning Tier 1, Tier 2, and smaller regions (as of September 30, 2024). The company is among the top two offline-first diversified retailers in India by city coverage as of March 31, 2024.
Diverse and Growing Brand Portfolio: VMML’s own brands are key growth drivers, contributing nearly 73% of its operating revenue for the six-month period ending September 30, 2024. In FY24, 19 brands achieved sales exceeding Rs 100 crore each, with six surpassing Rs 500 crore.

RISK FACTORS

Dependence on Third-Party Vendors: VMML relies exclusively on third-party vendors for manufacturing its own branded products, ensuring adherence to its specifications, quality, design, and manufacturing standards. Any delays or disruptions in the supply chain could impact the company’s operations.
Regulatory Investigations: VMML has received two notices from the Enforcement Directorate (ED) requesting information and documents as part of an ongoing investigation. Any unfavourable outcome could result in further inquiries, escalations to legal proceedings, or potential penalties.
Contingent Liabilities: As of September 30, 2024, VMML reported contingent liabilities amounting to Rs 61 crore. If these liabilities materialize, they could negatively impact the company’s financial position.
Legal Proceedings: VMML and its subsidiaries are currently involved in legal disputes with claims totalling Rs 46 crore. Any unfavourable outcome could impact its reputation and financial position.

Financials

All Values are in Cr.

Issue details

Issue type

Mainstream

Issue size

₹ 8,000 crore

Fresh Issue

₹ -

OFS

₹ 8,000 crore

Price range

₹ 74 - 78

Lot size

190 shares

Issue Objective

This is a pure Offer for Sale (OFS) and hence, the company will not receive any proceeds from the issue. The funds will be directed to the selling shareholders.

Dates

Bidding open

11 Dec'24

Bidding close

13 Dec'24

Allotment date

16 Dec'24

Refund date

17 Dec'24

Listing

18 Dec'24

IPO Reservations

Qualified institutional buyers

<50%

Non-institutional investors

>15%

Retail individual investors

>35%

Read the Offer Document

This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.

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