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Renewed push for growth; U/G to ADD

Result Synopsis

Vijaya management appeared upbeat on centre addition and indicated opening of ~10 hubs in 2 years at a capex of Rs2-2.2bn which appears an increase over previously outlined expansion. Pune would be the focus area as company attempts to create Hyderabad type of network with addition of 5 hubs over next 2 years. Q4 footfall growth excluding PH at ~15% is an affirmation of healthy underlying trend in volumes especially in core Hyderabad market which is growing in early double digit. Capex of Rs1-1.1bn in FY25 and FY26 each is well within the estimated Rs1.8-1.9bn in operating cash thrown in each of those 2 years leaving room for further expansion. We reckon capex has been increased by Rs400mn over next 2 years with revenue impact seen from FY26 onwards; accordingly, we have raised FY26 volume growth by ~3% ex-PH along with Rs700mn PH revenues (currently Rs450mn annualized) leading to a raise in EPS estimate by 14%. Anticipating a faster growth ambition, we raise target PE multiple to 40x (slight premium to Dr Lal/Metropolis) and upgrade to ADD with revised TP Rs800 (earlier Rs610).

Result Highlights

Revenue beat as standalone volume growth of 14.7% supports 18.5% increase in sales Margin stable YoY at ~41% as gestation of new hubs opened in last 12 months offset natural operating leverage due to volume growth Kolkata hub running ahead of expectation and management alluded to break even in next 2 months vs earlier expectation of Q2/early Q3 PAT up 22% on inclusion of PH revenues of Rs118mn for Q4

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