Motilal Oswal Bullish on V-Mart Retail, Targets Rs 900

Motilal Oswal Reiterates Buy on VMart Retail with Revised Target Price

VMart Retail (VMART) delivered a strong fourth quarter (4QFY26) with a significant year-over-year (YoY) revenue growth of approximately 25%. This growth was driven by a sharp acceleration in blended same-store sales growth (SSSG) to 12%, a notable improvement from the flat growth seen in the third quarter (3QFY26). Pre-Indian Accounting Standards (IND AS) earnings before interest, depreciation, and amortization (EBITDA) grew 5.2 times YoY as the company's margin expanded by approximately 250 basis points (bp) YoY.

The expansion in margin was driven by operating leverage, partly offset by elevated inventory provisioning and higher advertising and promotion (A&P) spends. However, both these factors were muted in the first nine months of FY26 (9MFY26). Management indicated that the demand environment remains stable, and the company has been taking several steps to mitigate the challenges posed by raw material inflation and their availability. Notably, the company has secured most of its supplies till December 26.

| Comparison of VMart Retail with VMM | | --- | --- | | VMart Retail (VMART) | VMM | | 20x FY28E EV/Pre-IND AS EBITDA | 29x FY28E EV/Pre-IND AS EBITDA | | 15x FY28E EV/Pre-IND AS EBITDA (undemanding valuation) | - |

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We have moderated our FY27 gross margin estimate by approximately 50 bp and, as a result, cut our FY27-28E pre-IND AS EBITDA estimates by 6-7%. Our revised estimates are supported by a compound annual growth rate (CAGR) of 17%/23%/27% in revenue/Pre-IND AS EBITDA/adjusted profit after tax (PAT) over FY26-28E. This growth is driven by an estimated 14% CAGR in store additions, mid-single-digit SSSG, and operating leverage benefits.

We reiterate our BUY recommendation on VMart Retail with a revised target price of INR900, based on 20x FY28E EV/Pre-IND AS EBITDA. Despite the recent run-up, valuations remain undemanding at approximately 15x FY28E EV/Pre-IND AS EBITDA, lower than the 29x multiple seen for VMM.