Vishal Mega Mart: JM Financial initiates coverage; check rating, target price & more
Domestic brokerage firm JM Financial has initiated coverage on Vishal Mega Mart, a recent debutant and a strong upside potential in the stock.
- Sep 29, 2025,
- Updated Sep 29, 2025 2:57 PM IST
Domestic brokerage firm JM Financial has initiated coverage on Vishal Mega Mart, a recent debutant and a strong upside potential in the stock. The brokerage is positive on its growth potential, robust operational efficiency, solid expansion plans and sound financial performance paving the way for more upside.
Vishal Mega Mart continues to assert its presence in India's organised retail sector, according to JM Financial, which highlights the retailer's focus on catering to aspirational middle- and lower-middle-income consumers. As of 30 June 2025, VMM operated 717 stores across 472 cities in 30 States and Union Territories, deriving over 70% of its revenue from Tier 2 and beyond regions. JM Financial attributes VMM's differentiated proposition to its broad merchandise mix—44% apparel, 28% FMCG, and 28% general merchandise—and strategic presence in less penetrated markets.
The brokerage firm underscores VMM's position among value retailers, citing a higher total addressable market due to its diversified offerings. Approximately 73% of sales arise from margin-accretive private label products, supporting robust unit economics. The company's asset-light approach enables rapid store expansion at lower capital expenditure, resulting in higher returns relative to peers.
The Indian retail market, valued at INR 76 trillion in 2023, has VMM catering to nearly half of this segment. JM observes that the organised market is projected to expand more rapidly, buoyed by rising brand awareness and a shift towards quality-focused products. Tier 2 towns, making up roughly 74% of India's retail expenditure and largely dominated by unorganised players, provide a significant opportunity.
Shares of Vishal Mega Mart were listed in December 2024, when the company raised a total of Rs 8,000 crore via IPO by selling its shares for Rs 78 apeice. The stock hit high of Rs 157.75 on August 26, 2025, more than doubling investors money. However, the stock was seen around Rs 141 on Monday, up 81% from its IPO price.
The financial services player highlights the efficiency of VMM's supply chain and inventory management, which, combined with a high share of private label sales and a favourable product mix, support a lean cost structure. VMM reportedly achieves a post-tax return on capital employed of around 58%, with a typical payback period of about 21 months on new investments. These operational strengths are seen as key drivers of the company's ongoing success.
The brokerage's analysis points to a significant growth runway ahead. JM Financial said, "Our analysis suggests VMM can add ~1,500 stores over the next ~15 years with an estimated annual addition of ~100 stores. It can expand stores not only by entering into new cities/towns but also by increasing penetration in existing cities. In 81% of its total city coverage, VMM has only 1 store. It is now focused on expanding in high per capita GDP states where its penetration is low."
On financial performance, JM Financial projects strong compounding with a CAGR of 19% for revenue, 26% for EBITDA, and 27% for PAT, driven by a 10% CAGR in store area and low double-digit same-store sales growth. The brokerage expects EBITDA margin expansion of ~170bps, leading to a margin of 10.7% (Pre-Ind AS) by FY28. Improved profitability and high asset turns are expected to yield strong RoE/RoCE (ex-goodwill) of 47/80% by FY28.
Compared to its closest peer D’Mart, VMM currently trades at a P/E multiple of 48x for March 2028, about 24% lower. Despite delivering higher growth in revenue, EBITDA, and PAT, and more than double the return ratios, VMM trades at a premium of 19-41% versus other mid- to large-cap retail firms. This is attributed to its strong fundamentals and the sizeable opportunity for market formalisation.
JM Financial initiates coverage with a 'BUY' rating and a target price of Rs 175, suggesting a 24% upside relative to the current market price. The firm has given the rating based on DCF methodology (10% WACC and 6% terminal growth), implying 67x P/E multiple Sep’27 (Pre-Ind AS 116)."
JM Financial identifies VMM’s premium trading multiples as justified by its larger addressable market, product mix, and potential for further store rollout, especially in underpenetrated, high-income states.
Domestic brokerage firm JM Financial has initiated coverage on Vishal Mega Mart, a recent debutant and a strong upside potential in the stock. The brokerage is positive on its growth potential, robust operational efficiency, solid expansion plans and sound financial performance paving the way for more upside.
Vishal Mega Mart continues to assert its presence in India's organised retail sector, according to JM Financial, which highlights the retailer's focus on catering to aspirational middle- and lower-middle-income consumers. As of 30 June 2025, VMM operated 717 stores across 472 cities in 30 States and Union Territories, deriving over 70% of its revenue from Tier 2 and beyond regions. JM Financial attributes VMM's differentiated proposition to its broad merchandise mix—44% apparel, 28% FMCG, and 28% general merchandise—and strategic presence in less penetrated markets.
The brokerage firm underscores VMM's position among value retailers, citing a higher total addressable market due to its diversified offerings. Approximately 73% of sales arise from margin-accretive private label products, supporting robust unit economics. The company's asset-light approach enables rapid store expansion at lower capital expenditure, resulting in higher returns relative to peers.
The Indian retail market, valued at INR 76 trillion in 2023, has VMM catering to nearly half of this segment. JM observes that the organised market is projected to expand more rapidly, buoyed by rising brand awareness and a shift towards quality-focused products. Tier 2 towns, making up roughly 74% of India's retail expenditure and largely dominated by unorganised players, provide a significant opportunity.
Shares of Vishal Mega Mart were listed in December 2024, when the company raised a total of Rs 8,000 crore via IPO by selling its shares for Rs 78 apeice. The stock hit high of Rs 157.75 on August 26, 2025, more than doubling investors money. However, the stock was seen around Rs 141 on Monday, up 81% from its IPO price.
The financial services player highlights the efficiency of VMM's supply chain and inventory management, which, combined with a high share of private label sales and a favourable product mix, support a lean cost structure. VMM reportedly achieves a post-tax return on capital employed of around 58%, with a typical payback period of about 21 months on new investments. These operational strengths are seen as key drivers of the company's ongoing success.
The brokerage's analysis points to a significant growth runway ahead. JM Financial said, "Our analysis suggests VMM can add ~1,500 stores over the next ~15 years with an estimated annual addition of ~100 stores. It can expand stores not only by entering into new cities/towns but also by increasing penetration in existing cities. In 81% of its total city coverage, VMM has only 1 store. It is now focused on expanding in high per capita GDP states where its penetration is low."
On financial performance, JM Financial projects strong compounding with a CAGR of 19% for revenue, 26% for EBITDA, and 27% for PAT, driven by a 10% CAGR in store area and low double-digit same-store sales growth. The brokerage expects EBITDA margin expansion of ~170bps, leading to a margin of 10.7% (Pre-Ind AS) by FY28. Improved profitability and high asset turns are expected to yield strong RoE/RoCE (ex-goodwill) of 47/80% by FY28.
Compared to its closest peer D’Mart, VMM currently trades at a P/E multiple of 48x for March 2028, about 24% lower. Despite delivering higher growth in revenue, EBITDA, and PAT, and more than double the return ratios, VMM trades at a premium of 19-41% versus other mid- to large-cap retail firms. This is attributed to its strong fundamentals and the sizeable opportunity for market formalisation.
JM Financial initiates coverage with a 'BUY' rating and a target price of Rs 175, suggesting a 24% upside relative to the current market price. The firm has given the rating based on DCF methodology (10% WACC and 6% terminal growth), implying 67x P/E multiple Sep’27 (Pre-Ind AS 116)."
JM Financial identifies VMM’s premium trading multiples as justified by its larger addressable market, product mix, and potential for further store rollout, especially in underpenetrated, high-income states.