IPO Report : Vishal Mega Mart Ltd By Choice Broking Ltd
Salient features of the IPO:
* Vishal Mega Mart Ltd. (VMM), is a one-stop destination for middle and lower-middle-income consumers in India, offering a curated selection of products across apparel, general merchandise, and FMCG, is coming up with an IPO to raise around Rs. 8,000cr, which opens on 11th Dec. and closes on 13th Dec. 2024. The price band is Rs. 74 - 78 per share.
* This public issue is fully OFS, thus the company will not receive any proceeds from this public issue.
* The promoter & promoter group and the non-promoter & non-public are participating in the OFS and offloading 102.56 - 108.11cr shares. PostIPO, the P&PG and public shareholders will have 76.02% and 23.98% stake in the company, respectively.
Key competitive strengths:
* Serving a Large and Growing Section of the Indian Population
* Consumer-Centric Approach Resulting in a Large and Loyal Consumer Base
* Diverse and Growing Portfolio of Own Brands across Product Categories
* Pan-India Presence with a Track Record of Successful Store Growth
* Technology Enabled and Systems Driven Operations
* Professional and Experienced Management Team
* Track Record of Delivering Revenue, Profit Growth and Capital Efficiency
Risk and concerns:
* General slowdown in the global economic activities
* Dependency on third-party vendors for manufacturing products sold in its stores
* Changing consumer preferences
* Revenue concentration from stores in Uttar Pradesh, Karnataka, and Assam
* Risks from leasing real estate for its operations
* Competition
Below are the key highlights of the company:
* Between CY16 and CY19, the Indian retail market experienced strong growth, expanding at a CAGR of approximately 12%, reaching Rs. 63 tn (about US$764 bn) by CY19. Despite this robust growth, the market remains under-penetrated compared to global counterparts, with per capita retail spending in India significantly lower than in the US and China. The retail landscape is gradually transitioning toward greater organization, especially with the rise of both offline and online retail platforms. The growing disposable incomes and urbanization are progressively displacing unorganized retail, particularly in Tier-2 cities, which are expected to grow at a 32% CAGR between CY23 and CY28
* The bulk of India’s retail spending is concentrated in the Aspirational Retail segment, encompassing both mass and massive brands. These segments cater to various price points and retail categories, making them integral to the market. Key categories such as Apparel, Staples & FMCG, and general merchandise together account for about 50% of the retail market as of CY23, driven by high purchase frequency and widespread demand. As India’s retail market becomes more organized, it is expected to mirror the market structures of developed economies like the US and China, with a substantial increase in organized retail across both Tier-1 and Tier-2 cities.
* VMM was incorporated as ‘Rishanth Wholesale Trading Pvt. Ltd.’ in Gurugram on March 26, 2018. The name was changed to ‘Vishal Mega Mart Private Limited’ on May 28, 2020. VMM is a one-stop destination for middle and lower-middle-income consumers in India, offering a curated range of products through its portfolio of own brands and thirdparty brands.
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SEBI Registration no.: INZ 000160131
