Finding a stock below Rs 200 is easy. Finding one that still carries a double-digit upside, after a strong runup in the last few quarters,  is much harder.

That is exactly where Vishal Mega Mart has caught the attention. The retail company’s share price is hovering around Rs 110, yet domestic brokerage Motilal Oswal believes there is room for nearly 50% upside, assigning a target price of Rs 165.

So, what is supporting this view? Let’s take a look at what Motilal Oswal has highlighted in its latest report –

Vishal Mega Mart: What stood out in the June quarter?

Motilal Oswal in its report noted that Vishal Mega Mart delivered another quarter of healthy growth. Revenue increased nearly 19% year-on-year. This is supported by both higher customer spending at existing stores and continued expansion of its retail network.

ALSO READ

The report highlighted that pre-Indian Accounting Standards (Ind AS) Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) margin improved to 10.2%. However, part of this benefit was offset by higher employee costs following minimum wage revisions in several states.

Profitability also remained strong. According to the Motilal Oswal report, pre-Ind AS EBITDA and Profit After Tax (PAT) grew 22% and 26% year-on-year, broadly matching its expectations.

Why is Motilal Oswal positive on Vishal Mega Mart?

Motilal Oswal believes the company’s operating performance continues to remain stable despite a competitive retail environment.

The report said, “Vishal Mega Mart remains among the most consistent retailers within our coverage.” 

It believes the company’s diversified product portfolio, strong private-label business and cost-efficient operating model continue to support earnings growth.

Another positive highlighted in the report is pricing discipline. Management indicated that price increases were introduced only in selected higher-priced products instead of across the entire portfolio.

The brokerage also noted, “Reduction in promotional activities contributed to higher gross margin rather than price hikes.” 

Management also expects consumer demand to improve further as inflationary pressures ease in the coming quarters.

Can Vishal Mega Mart continue delivering similar returns?

According to Motilal Oswal, the answer remains positive.

The brokerage expects the company to report a compound annual growth rate (CAGR) of 19% in revenue, 24% in pre-Ind AS EBITDA, and 27% in Profit After Tax between FY26 and FY29.

This growth, according to the report, is expected to come from store expansion, healthy same-store sales growth and gradual improvement in operating margins.

The report added, “We model a CAGR of 19%/24%/27% in revenue/pre-IND AS EBITDA/PAT over FY26-29E.”

It also expects annual improvement in EBITDA margins as the business continues to scale.

What are the risks?

The brokerage has also flagged several issues that investors should monitor in this retail sector stock.

The report highlighted concerns around possible promoter stake sales after the lock-in period expires. Long-term promoter ownership and leadership continuity also remain important factors.

The continuity of the company’s long-serving Chief Executive Officer after June 2027 is another factor that could remain under investor focus.

Disclaimer: The stock price target and growth projections highlighted in this article are derived from a third-party brokerage report and are presented strictly for informational and educational purposes. This coverage does not constitute an offer, solicitation, or recommendation to buy, sell, or hold any financial security. Stock market investments are subject to market risks, and price targets or historical performance are no guarantee of future returns. Readers are strongly advised to conduct independent research and consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.