Mehabe score: 4 G Factor: 4 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 4.
Description
V-Mart Retail is engaged in the business of Value Retailing through the chain of stores situated at various cities in India.
Main Points
Low cost focus
Around ~80% of V-Mart’s revenues come from affordable fashion apparel which is sold at price points between Rs 80 and Rs 800 (Rs 334 being the average price point) # and the balance ~20% revenues come from selling general merchandise like footwear and FMCG.
Since 2009, the company has rapidly expanded its store network predominantly in the Hindi belt of Uttar Pradesh and Bihar. V-Mart’s gets all its stores on lease and as of today operates ~265 stores of which, around two-thirds are located in the four states of Uttar Pradesh, Bihar, Jharkhand and Uttarakhand.Site:VMARTMain Symbol:VMART
Stock trades at 3880.0, above its 50dma 3146.0. It also trades above its 200dma 2677.15. The stock remains bullish on techicals
The 52 week high is at 4085.00 and the 52week low is at 1700.00
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– Stock is trading at 9.27 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 5.85% over past five years.
– has a low return on equity of 7.44% for last 3 years.
-Promoter holding has decreased over last 3 years: -7.39%
Competition
– The industry trades at a mean P/E of 126.0x. Avenue Super. trades at the industry’s max P/E of 201.55x. VMART trades at a P/E of x
– Industry’s mean G-Factor is 4.1 while the mean Piotski score is 6.0. VMART has a G-Factor of 4 and Piotski scoreof 4.
– Average 1 month return for industry is 14.9%. The max 1- month return was given by Arvind Fashions.: a return of 53.36 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 351.87 cr compared to Rs 332.66 cr for period ended Mar 2020, a rise of 5.8%
Operating Profits reported at Rs 33.57 cr for period ended Mar 2021 vis-vis 27.84 for period ended Mar 2020 .
Operating Margins expanded 117.2 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs -0.75 compared to Rs 26.34 for previous quarter ended Dec 2020 and Rs -4.65 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1075.0 cr for period ended Mar 2021 vis-vis sales of Rs 1662.0 cr for the period ended Mar 2020, a fall of 54.6%. The 3 year sales cagr stood at -4.2%.
Operating margins shrank to 12.0% for period ended Mar 2021 vis-vis 13.0% for period ended Mar 2020, contraction of 100.0 bps.
Net Profit reported at Rs -6.0 cr for period ended Mar 2021 vis-vis sales of Rs 49.0 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 149.0 cr for period ended Mar 2021 vis-vis Rs 86.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -1.0% compared to 7.0% over the last 3 Years. – The stock has given a return of 120% on a 1 Year basis vis-vis a return of 12% over the last 3 Years. – The compounded sales growth on a TTM bassis is -35% vis-vis a compounded sales growth of -4% over the last 3 Years. – The compounded profit growth on a TTM basis is -113% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 23.39% vis-vis 24.35% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 9.1% vis-vis 8.15% for Mar 2021
Conclusion
– – Stock is trading at 9.27 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 5.85% over past five years.
– has a low return on equity of 7.44% for last 3 years.
-Promoter holding has decreased over last 3 years: -7.39%
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 3146.0 and is trading at 3880.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
