Vishal Mega Mart Ltd.’s initial public offering, which is scheduled to open on Wednesday, will be a pure offer for sale, with promoter Samayat Services LLP offering shares worth up to Rs 8,000 crore.

The price band for the IPO has been set in the range of Rs 74 to Rs 78 per share. The market value at the upper end of the price band is Rs 35,168 crore.

At the time of filing of the red herring prospectus, Samayat held a 96.46% stake in the Gurugram-based hypermarket operator. Since the Vishal Mega Mart IPO is entirely an OFS, proceeds from the offer will go directly to the selling shareholders.

Vishal Mega Mart Issue Details

  • Issue opens: Dec. 11.

  • Issue closes: Dec. 13.

  • Issue price: Rs 74–78.

  • Offer for sale: Rs 8,000 crore.

  • Fresh issue: Nil

  • Total issue size: Rs 8,000 crore.

  • Lot size: Minimum 190 shares, and then in multiples thereof.

Business

Vishal Mega Mart is a fashion-led hypermarket chain, which is supported by Kedaara Capital and Partners Group. The company offers apparel, general merchandise and fast-moving consumer goods through a pan-India network, and Vishal Mega Mart mobile application and website. It particularly caters to middle and lower-middle income households.

It has a portfolio of its own brands across apparel, general merchandise and FMCG products, and operates a hub-and-spoke distribution model to manage in-store inventory. As of Sept. 30, the company operates one central distribution centre, one distribution centre, and 17 regional distribution centres, each located in close proximity to its major demand areas.

Financial Performance

While Vishal Mega Mart has seen a steady revenue growth over the past few years on a consolidated basis, the company’s margin expansion has remained muted, hovering around the 14% mark since financial year 2022. The company’s bottom line has seen a compounded annual growth rate of nearly 51% over fiscal 2022–24.

In the first half of the current fiscal, the company’s revenue jumped 19% to Rs 5,033 crore. Operating income stood at Rs 668 crore, a 17% year-on-year increase, and its margin against the top line fell 26 basis points to 13.27%. Its profit rose 30% to Rs 254 crore.

Future Growth Strategies

  • Launch of new brands from time to time.

  • Consumer-centric approach, which has helped the company create a “large and loyal” consumer base.

  • Plan to expand store footprint in existing and new cities.

  • Driving same-store sales growth through multiple initiatives.

  • Improving cost efficiencies across operations.

  • Favourable macroeconomic conditions with robust consumption trends in middle-income segments.

  • Private consumption outpacing gross-domestic-product growth in India, which will be a key catalyst to company’s growth.

Vishal Mega Mart IPO: Key Risks

  • The company does not manufacture any products sold in its stores, instead relies entirely on third-party vendors.

  • The company has received two directives from the Enforcement Directorate as part of its investigation, issue may escalate.

  • As a retailer, the company fails to identify and respond to changing consumer preferences in a timely manner

  • Heavy dependence on cash flows from stores in Uttar Pradesh, Karnataka and Assam. Any adverse developments in these states can hit revenue significantly.

Vishal Mega Mart IPO GMP

The grey market premium of Vishal Mega Mart IPO was Rs 25 as of 8:01 a.m. on Tuesday, according to InvestorGain. This implies shares of the company will likely list at Rs 103 apiece, indicating a 32% premium to the upper end of the price band.

It should be noted that GMP or grey market price is not an official price quote for the stock and is based on speculation.

Disclaimer: Investments in initial public offerings are subject to market risks. Please consult with financial advisors and read red herring prospectus thoroughly before placing bids

Watch The IPO Adda Here

. Read more on IPOs by NDTV Profit.Since the initial public offering is entirely an offer for sale, proceeds from the OFS will go directly to Vishal Mega Mart’s selling shareholders.  Read MoreIPOs, Markets, Business, Notifications 

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