Vishal Mega Mart is a prominent retail destination catering to the middle and lower-middle-income segment of India. The company provides a wide range of products through its own and third-party brands, meeting the aspirational and daily needs of consumers. Their focus lies in offering affordable, high-quality, and convenient products across three key categories: apparel, general merchandise, and fast-moving consumer goods (FMCG). With a pan-India network of 626 stores (as of June 30, 2024) and a strong online presence through their mobile application and website, Vishal Mega Mart is well-positioned for growth.

The company is now launching its IPO, amounting to ₹8,000 Crores, consisting entirely of an Offer for Sale of 10,256.41 Lakh shares. The price band for the IPO is set at ₹74 to ₹78 per equity share. With this offering, the company will have a market capitalization of approximately ₹35,168.01 Crores at the upper price of ₹78 per share. The lot size of the IPO is 190 shares, and retail investors are required to invest a minimum of ₹14,820. High-Net-Worth Individuals (HNIs) need to invest a minimum of ₹2,07,480 for 14 lots (2,660 shares).

The IPO subscription period runs from December 11 to December 13, 2024, and the allotment date is scheduled for December 16, 2024. The shares are expected to be listed on the BSE and NSE on December 18, 2024.

As of December 7, 2024, the Grey Market Premium (GMP) for the Vishal Mega Mart IPO stands at ₹16, which suggests a 20.84% potential listing gain. However, it is important to note that GMP is based on unregulated market activity, and actual listing prices may vary.

In terms of financials, Vishal Mega Mart has seen impressive growth in its revenues: for FY 2024, the company posted revenues of ₹89,451.27 Million, up from ₹76,188.93 Million in FY 2023. The company’s EBITDA for FY 2024 was ₹12,817.82 Million, a solid increase from ₹10,534.37 Million in FY 2023, while the profit after tax (PAT) reached ₹4,619.35 Million in FY 2024, reflecting continued profitability.

Regarding valuation, the pre-issue EPS stands at ₹1.01, and the post-issue EPS is ₹0.10. The pre-issue P/E ratio is 77.23x, and the post-issue P/E ratio is 76.13x, compared to an industry average of 131x. The Return on Capital Employed (ROCE) for FY 2024 is 68.76%, reflecting strong operational efficiency, while the Return on Equity (RoE) is 8.18%. These financial metrics suggest that the IPO is reasonably priced, with potential for future growth.

The proceeds from the Offer for Sale will be received entirely by the Promoter Selling Shareholder and will be used for various purposes, including the payment of related expenses and taxes.

Given the 20.84% GMP and the company’s solid financials, we recommend investing in the Vishal Mega Mart IPO for listing gains. However, investors should also consider the company’s strong market presence and future growth prospects.

The Upcoming IPOs in this week and coming weeks are Dhanlaxmi Corp, Jungle Camps, Toss The Coin, Sai Life Sciences, Mobikwik, Vishal Mega Mart, Supreme Facility, Purple United, Rosmerta Digital, Inventurus Knowledge and Avanse Financial.

The Current active IPO is Emerald Tyre Manufacturers.

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