Vishal Mega Mart share price jumps 7% after bumper listing. Should you buy, sell or hold?

Stock Market Today: Vishal Mega Mart share price made a strong debut on the stock market on Wednesday, December 18, listing at ₹104 per share on the NSE, marking a 33.33% premium over the issue price of ₹78. On the BSE, the stock opened at ₹110, 41% higher than the issue price.

Even after a strong start, the stock continued its momentum, gaining another 7% against the listing price to reach ₹111.19 on the NSE. At 2:30 p.m., the stock was trading at ₹109 apiece. This surge followed a strong investor response to the issue, which was oversubscribed by 28 times, with significant interest coming from the QIB segment. The IPO received bids worth over ₹1.61 lakh crore compared to the issue size of ₹8,000 crore.

Following the stock's stellar debut, analysts remain mixed on the company's prospects. While some have expressed caution regarding further gains, as the company will not directly benefit from this IPO, given its offer-for-sale nature, others are optimistic about Vishal Mega Mart's growth trajectory and cost-effective initiatives. 

Vishal Mega Mart Shares: Where are they headed?

Shivani Nyati, Head of Wealth at Swastika, stated that Vishal Mega Mart's IPO made a strong debut on the stock market. This positive momentum can be attributed to its strong subscription of 28.75 times, reflecting high investor demand, said Nyati.

Nyati emphasised that the company’s strong position as a leading offline retailer, coupled with its consistent financial performance and reasonable valuation, resonated well with investors.

However, as the IPO was a complete offer for sale, there are no direct benefits to the company, making it a play purely on market sentiment and its growth story in the retail sector. She advised investors to book profits at this level and said that those looking to hold shares can maintain a stop loss of around ₹95.

Prashanth Tapse, Senior Vice President of Research at Mehta Equities, echoed similar sentiments, suggesting that conservative investors who have been allotted shares may consider booking profits today due to the current stock market volatility.

For long-term, risk-tolerant investors, Tapse recommended holding onto the stock with a long-term perspective. He also advised non-allotted investors to consider accumulating the stock if it dips following the listing, particularly if profit-taking occurs.

With strong growth prospects and ongoing cost-efficiency initiatives, Vishal Mega Mart presents an attractive investment opportunity, according to Akriti Mehrotra, Research Analyst, StoxBox.

The company is making significant strides in its expansion, focusing on underserved Tier-2 and Tier-3 cities to capitalise on emerging growth opportunities. The company is also driving same-store sales growth by diversifying its product portfolio and enhancing in-store experiences.

She recommended investors, who have been allotted shares, to hold their positions from a medium to long-term perspective.

About Vishal Mega Mart

Vishal Mega Mart is a one-stop destination catering to middle- and lower-middle-income households in India. The company offers a diverse range of merchandise through its portfolio of its own brands and third-party brands.

Its product offerings span three major categories: apparel, general merchandise, and fast-moving consumer goods (FMCG). These products are available through a pan-India network of 626 Vishal Mega Mart stores (as of June 30, 2024), as well as its mobile application and website.

According to the company's RHP, Vishal Mega Mart is ranked among the top three offline-first diversified retailers in India based on retail space as of March 31, 2024.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.