Emkay Global Financial Services Limited has issued a BUY recommendation for Vishal Mega Mart (VMM), setting an ambitious target price of Rs 180 against the current market price of Rs 136, implying a potential upside of 32.4%. Following an insightful management meeting with CEO Gunender Kapur, the brokerage reaffirms its bullish thesis on the retail powerhouse, citing sustained double-digit same-store growth, aggressive geographical expansion, and robust profitability metrics. The company's differentiated private label strategy, quick-commerce momentum, and successful penetration into underdeveloped South Indian markets position VMM as a compelling value creation story. With EBITDA margins projected to expand from 14.3% to 15.6% by FY28 and adjusted PAT expected to clock a remarkable 31% CAGR through FY25-28, Vishal Mega Mart emerges as a strategic pick for growth-oriented investors seeking exposure to India's rapidly evolving organized retail landscape.​

Brokerage Recommendation and Price Targets

Emkay Global Financial Services Limited has maintained its BUY rating on Vishal Mega Mart with a 12-month target price of Rs 180 per share. Trading at Rs 136, the stock offers substantial appreciation potential of 32.4%, making it an attractive proposition for value and growth investors. The stock has demonstrated relative resilience despite recent market volatility, recording a 52-week high of Rs 158 and a 52-week low of Rs 96. With a market capitalization of Rs 635 billion and free float of 45%, VMM commands significant institutional interest, with Foreign Portfolio Investors and Mutual Funds collectively holding 40.8% of the equity.​

Sustained Double-Digit Growth Trajectory

Management has expressed unwavering confidence in maintaining low double-digit same-store sales growth on an annual basis, driven by strategic initiatives including private label expansion, GST reduction benefits, and encouraging traction in quick-commerce operations. The company registered impressive adjusted SSG figures of 25.2% in FY23, moderating to 13.6% in FY24 and 12.3% in FY25, with projections indicating stabilization around 10-11% through FY28. Revenue growth trajectory remains robust, with FY25-28 expected to deliver a 19% CAGR, translating into topline expansion from Rs 107.16 billion in FY25 to Rs 181.20 billion by FY28. This remarkable growth synthesis stems from a balanced combination of 10% retail space CAGR and 9% revenue per square foot CAGR over the forecast horizon.​

Quick-Commerce: The Emerging Growth Engine

VMM's foray into quick-commerce has emerged as a formidable incremental revenue channel, successfully onboarding younger, time-constrained consumers who constitute approximately 20% of the overall quick-commerce customer base. The channel demonstrates particularly strong performance in FMCG categories, accounting for 70% of quick-commerce sales, while offering convenience for bulky purchases that are suboptimal for physical store transactions. Quick-commerce contribution currently ranges between 1.5% to 9.0% across different stores, with mature locations already exceeding management's initial 5% expectation. The economics appear compelling, with average order values reaching Rs 700 in established stores, gross margins of 23-24%, and incremental delivery costs of merely Rs 30-40 per order, positioning the channel near cash breakeven. The company has successfully deployed quick-commerce capabilities across approximately 460 cities, demonstrating scalability and operational excellence.​

Geographical Expansion and Store Format Innovation

Vishal Mega Mart is witnessing exceptional traction across the historically underpenetrated South Indian markets, with Karnataka operations showing improved throughputs following strategic rightsizing of oversized stores from 25,000 square feet to the company average of 17,500 square feet. The Southern expansion momentum significantly exceeds initial projections, supported by robust demand for high-margin apparel categories. Simultaneously, VMM has pioneered a smaller store format designed to penetrate deeper into Tier 2+ cities, with initial pilots demonstrating throughput and return ratios comparable to larger formats through intelligent product and pricing mix optimization. The company plans to scale this innovative format to 40-50 stores over the next year before finalizing the model for accelerated expansion. Store network expansion remains aggressive, with net additions projected at 100-120 stores annually through FY28, elevating the total footprint from 611 stores in FY25 to 1,026 stores by FY28.​

Financial Performance and Profitability Metrics

VMM's profitability architecture demonstrates progressive margin expansion despite significant growth investments, with EBITDA margins advancing from 14.3% in FY25 to an estimated 15.6% by FY28. This improvement stems from headquarters cost leverage and operational efficiencies generated by the new automated warehouse infrastructure. Adjusted PAT exhibits exceptional growth momentum, accelerating from Rs 6.32 billion in FY25 to a projected Rs 14.47 billion by FY28, representing a stellar 31% CAGR. Return on Invested Capital (RoIC) demonstrates remarkable improvement trajectory, escalating from 12.3% in FY25 to an estimated 21.9% by FY28, validating management's capital allocation discipline.​

Private Label Strategy and Inventory Management

The cornerstone of VMM's competitive moat resides in its differentiated private label strategy, with proprietary brands commanding approximately 75% of revenue mix as of H1FY26, enabling the company to deliver exceptional value propositions while sustaining healthy margins. This strategic positioning allows VMM to reinvest scale-led sourcing and cost savings back into product innovation, providing consumers with best-in-class fashion relevance that drives customer loyalty and repeat transactions. Management is evaluating RFID (Radio Frequency Identification) implementation across the apparel category, which promises to revolutionize inventory control mechanisms and substantially reduce volume and value shrinkage at store level. The technology deployment could yield significant operational efficiencies and enhance merchandise availability metrics.​

Valuation Analysis and Investment Recommendation

At the current market price of Rs 136, Vishal Mega Mart trades at 73.5x FY26E P/E and 32.3x FY26E EV/EBITDA, valuations that appear elevated on absolute terms but reasonable considering the company's exceptional growth profile and margin expansion potential. The stock's forward P/E multiple compresses attractively to 55.6x for FY27 and 44.6x for FY28, reflecting the powerful earnings compounding trajectory. With net debt position turning increasingly negative (net cash of Rs 15.31 billion by FY26E expanding to Rs 36.38 billion by FY28E), the company exhibits fortress balance sheet characteristics. Free cash flow generation remains robust, with FCFF expected to scale from Rs 11.32 billion in FY25 to Rs 17.37 billion by FY28, comfortably funding store expansion requirements while maintaining financial flexibility. Investors should target accumulation zones between Rs 125-140 for medium-term appreciation toward the Rs 180 target, with potential for re-rating as visibility on sustained double-digit SSG and margin expansion crystallizes.