V-Mart Retail Ltd - Growth Story on Track; Result Update Q3FY15 :: Edelweiss

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V-Mart Retail Ltd. (VMart) has reported stellar set of numbers for Q3FY15. Revenues grew by 22.8% YoY on back of a superior same store sales as well as volume growth. EBITDA saw an impressive growth of 34% on the back of improved gross profit. PAT jumped by a whopping 71% to INR 24cr. A strong festive season supported by wedding season led to strong growth numbers for this quarter.

VMart’s strong revenue visibility, RoE in excess of 20% (supported by focus on profitability), better working capital management and stable debt-equity ratio are positives for the stock. We believe that VMart can sustain CAGR of 35% in revenue and 34% in PAT over FY14-FY16E. We continue to remain bullish on VMart’s long-term growth story.

Revenue growth at 22.8%; Superior same store sales and volume growth reported 

VMart recorded a top line of INR 240 cr in Q3FY15 i.e. a stellar growth of 22.8%. This strong revenue numbers were led by Festive season and wedding season sales. Same Store (Fashion) Volume and Sales growth stood at an impressive 6.9% and 7.6% respectively. Average Selling Price saw an increase of 9% yoy and stood at INR313 for fashion.  This quarter also saw an increased contribution of ‘Fashion’ segment to total revenues from 89% last quarter to 93% this quarter. Revenue contribution from ‘Kirana’ segment in turn declined from 11% in Q2FY15 to 7% in Q3FY15.

EBITDA growth at 34%; PAT growth stood at 71%

EBITDA reported a 34% yoy growth and stood at INR 35 cr. The EBITDA margins stood at 14.4% i.e. 121bps yoy improvement. This EBITDA margin improvement can be mainly attributed to 94bps improvement in Gross margins as well as stringent cost control initiatives employed by the company. Employee costs witnessed a 30bps hike. Shrinkage for the quarter was reported at 1.08%. Q3FY15 PAT grew by 71.3% to INR 24 cr.

VMart’s expansion plans intact

VMart’s store strength at the end of Q3FY15 stands at 107 in 90 cities across 12 states. Q3FY15 saw opening of nine stores - five in UP, two in Bihar and one each in Uttarakhand and Jharkhand. Tier II cities witnessed the most store openings (4 stores) whereas Tier I saw opening of 4 new stores and 3 new stores were added in Tier III. The management has reaffirmed its plan to meet the target of store openings for the full year. In comparison, VMart saw no store closures in this quarter. The total retail space reported as at the end of Q3FY15 was 8.73 Lac sq.ft i.e. an increase of 0.8 Lac sq.ft over the last quarter.

LINK
https://www.edelweiss.in/research/V-Mart-Retail-Ltd--Growth-Story-on-Track;-Result-Update-Q3FY15/10005479.html