Antique notes have given a 'buy' rating for V-Mart Retail, stating that demand has been trending favourably with footfalls in March almost at 90 percent of pre-COVID levels. The brokerage firm has set a price target of Rs 3,180 for the stock.

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The brokerage firm adds: “The management expects demand momentum to pick up aided by upcoming festivals and wedding season." However, any spike in COVID cases in its key geographies could pose near-term challenges.

Further, the company may resort to 5-8 percent price hikes to offset the inflation in cotton and yarn prices. Also, the companies store addition plans of 25 percent per annum will be funded via internal accruals and the utilisation of qualified institutional placement proceeds towards building warehouse and omnichannel capabilities will widen their digital/customer interaction and complement their brick and mortar business.

The brokerage firm believes the impact of competition from E-commerce on value fashion mass retailers in their key geographies will be relatively lower due to lower ASP and higher cost of last-mile delivery. And that with the tailwind in value retailing expected to last longer, the company remains a structural penetration story with a strong balance sheet to support the expansion.

The brokerage firm has increased EBITDA (earnings before interest, taxes, depreciation, and amortisation) estimates for 2022 fiscal and 2023 fiscal by 3 percent and 4 percent, respectively, because of quicker-than-expected recovery. Given superior positioning in VF mass category backed by better management bandwidth, expect a re-rating going ahead, states the brokerage firm.

(Edited by : Abhishek Jha)

First Published:Mar 25, 2021 3:09 PM IST