Why Vishal Mega Mart shares jumped 11% in early trade

Shares of Vishal Mega Mart Ltd surged 11.39 per cent in Monday's early trade to hit a high of Rs 115.40. The stock was last seen trading 9.22 per cent higher at Rs 113.15.

Despite Monday's gain, the stock remained down 16.65 per cent on a year-to-date (YTD) basis.

The sharp upmove came after Morgan Stanley maintained an 'overweight' rating on the stock following the company's decision to reappoint Gunender Kapur as Managing Director and Chief Executive Officer (MD & CEO) for another five years.

The global brokerage believes the decision would help allay market concerns to some extent.

Vishal Mega Mart said Kapur was initially appointed as MD & CEO for a three-year period effective June 27, 2024.

His current term is scheduled to expire on June 26, 2027.

The company's board has now approved his reappointment for five years from September 1, 2026, to August 31, 2031, subject to shareholders' approval.

He will also be redesignated as 'Founder, Managing Director & Chief Executive Officer'.

Separately, Elara Capital said Vishal Mega Mart's Q1 FY27 performance was in line with its estimates across revenue, EBITDA and PAT. The company reported 10 per cent same-store sales growth (SSSG) during the quarter, also in line with the brokerage's expectations.

The domestic brokerage noted that store additions remained on track, with the company adding 24 net stores during the quarter. Management expressed confidence in its ability to offset margin pressure within the existing cost structure, while remaining cautious about the potential impact of a further deterioration in the operating environment.

Elara said it would maintain its estimates while monitoring cost inflation and the company's pricing actions. The brokerage retained its 'BUY' rating on the stock and set a target price of Rs 159.