At 52-week high! V-Mart Retail stock soars over 17% in 2 sessions on strong Q1 results; should you buy?

Shares of V-Mart Retail soared almost 10 percent to their 52-week high on Thursday, extending gains for the second straight session after the firm posted robust results for the quarter ended June 2024 (Q1FY25).

The stock rose as much as 9.8 percent to its 52-week high of ₹3,820 in today's deals after a 6.66 percent rise in the previous session. In these 2 session, the stock has rallied over 17 percent. With today's surge, the stock has now zoomed 140 percent from its 52-week low of ₹1,591, hit on October 30, 2023.

V-Mart Retail reported a net profit of ₹12 crore for the June quarter, recovering from a loss of ₹22 crore in the same period last year. The company's revenues reached ₹786 crore in Q1, marking a 16 percent year-on-year increase from ₹678.5 crore in the corresponding period of the previous fiscal year.

For Q1 FY25, V-Mart's revenue from retail trade was ₹774.50 crore, a 17.14 percent year-on-year increase, while revenue from the digital market declined by 33.29 percent to ₹11.58 crore.

EBITDA surged by 88.93 percent to ₹99 crore in Q1 FY25, compared to ₹52.4 crore in Q1 FY24. The EBITDA margin improved to 12.6 percent in Q1 FY25 from 7.7 percent in the same quarter last year.

Same-store sales growth (SSSG) increased by 11 percent year-on-year for the quarter, driven by higher footfall. Inventory at the end of the period stood at ₹671 crore, down ₹54 crore year-on-year, improving working capital.

"The Company remains focused on its store expansion plan and has opened 7 new stores in Q1 FY25 and closed 3 underperforming stores, taking the total number of stores pan-India to 448 as at quarter end," V-Mart Retail stated in the exchange filing.

Stock Trend

The stock has surged more than 50 percent over the past year and over 90 percent year-to-date in 2024. It has risen approximately 7 percent in August so far, building on a 17.2 percent increase in July and a 38.5 percent rise in June. However, the stock declined by 2.3 percent in May. Prior to that, it gained 0.35 percent in April and 12.6 percent in March. In February, the stock dropped 12.2 percent following an 8.7 percent gain in January 2024.

Brokerage View

Following the earnings report, brokerage firm Axis Securities has maintained its "buy" recommendation on V-Mart Retail, while revising the target price to ₹3,650 from ₹3,450, suggesting about a 5 percent downside.

Axis Securities noted that V-Mart is implementing key strategies to achieve its objectives, including: 1) Reducing expenses and losses to guide the Lime Road business towards profitability; 2) Focusing on an omnichannel model to attract customers back to V-Mart and Unlimited; 3) Prioritising product quality and up-to-date fashion trends; 4) Adhering to its store expansion plan of opening 50 new stores annually. The brokerage also pointed out that demand is expected to recover, particularly in rural and smaller towns, which form V-Mart’s core customer base, driven by government infrastructure spending, a normal monsoon, and stable inflation. These factors are anticipated to enhance the company’s prospects in the medium to long term.

Axis Securities has maintained its EBITDA estimates for FY25/26 and remains optimistic about the stock, projecting a compound annual growth rate (CAGR) of 15 percent for revenue and 34 percent for EBITDA from FY24 to FY27.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.