Shares of Vishal Mega Mart debuted on the NSE with a bang, listing at a 33.33% premium over its IPO price of Rs 78. The stock opened at Rs 104, providing significant gains to investors who participated in the IPO. This stellar debut brought the market capitalisation of the Gurugram-based retail giant to Rs 46,891 crore.
The Rs 8,000-crore IPO witnessed massive investor interest, with the issue being oversubscribed 27 times during the three-day bidding process. Investors placed bids for 2,064 crore shares against the 75.67 crore shares available. The IPO was priced between Rs 74-78, with allotments made at the upper end of the band.
Anchor Investor Participation
A large part of the IPO proceeds, amounting to Rs 2,400 crore, was raised from anchor investors such as SBI Mutual Fund, Government of Singapore, Nomura Funds, Axis MF, HDFC MF, and ICICI Prudential MF. The offering was entirely an Offer for Sale (OFS) by the promoter entity, Samayat Services LLP, backed by Kedara Capital.
Business Strength and Growth
With a gamut of value-for-money products like Rs-99 garments to economical groceries, Vishal Mega Mart is currently operating a formidable 645+ store network spread across the country targeted at middle and lower-middle-class households. With a high degree of focused approach targeting Tier 2 and Tier 3 cities, this places it in a strong position within the INR 600 billion grocery and supermarket market in India, keeping it encapsulated from quick commerce competition.
Equally, financials lead the charge of growth seen. Revenue increased 26.3% on a three-year CAGR, reaching Rs 8,912 crore in FY24 from Rs 5,589 crore for FY22. EBITDA went up to Rs 1,249 crore whereas net profit for FY24 stood at Rs 462 crore.
Ahead of the listing, it had commanded a grey market premium of 25%+ which spoke volumes about its investor confidence. Experts opined in mixed tones. If some advised conservative investors to book profits if the gains exceeded 25% during the listing, others showed the company’s long-term growth potential.
On the upper price band, it was valued at a P/E ratio of 67.83x with a return on net worth (RoNW) standing at 8.18%. The analysts said the small cities focus of Vishal Mega Mart and resilient business against quick-commerce companies makes the company a ‘good’ choice for medium-to long-term investors.
With its successful IPO and strong business fundamentals, Vishal Mega Mart is still a retailer to reckon with in the Indian retail sector, at least for long-term investors.
Do you have a news tip for Lakshmishree reporters? Please email us at media@lakshmishree.com
Source: Moneycontrol
News Desk
