Vishal Mega Mart shares debut at 33% premium on NSE
What's the story
Gurugram-based retail giant Vishal Mega Mart made a strong debut on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) today.
The company's shares opened at a premium of 33.33% over the IPO allotment price of ₹78.
The strong opening translated into an opening price of ₹104 per share, much to the delight of IPO investors.
Market impact
Vishal Mega Mart's market capitalization reaches ₹46,891 crore
The successful listing of Vishal Mega Mart has resulted in a massive jump in its market capitalization, which now sits at ₹46,891 crore. The company's IPO received an enthusiastic response from investors last week.
Over a three-day bidding period, the public issue was oversubscribed by over 27 times with bids for 2,064 crore shares against the 75.67 crore shares on offer.
Investor participation
Anchor investors contribute ₹2,400 crore to Vishal Mega Mart's IPO
A large chunk of the money raised through Vishal Mega Mart's IPO, ₹2,400 crore, was contributed by anchor investors.
These were SBI Mutual Fund, Government of Singapore, Nomura Funds Ireland Public Ltd., Axis Mutual Fund (MF), HDFC MF and ICICI Prudential MF.
The entire IPO was an offer for sale by the promoter entity Samayat Services LLP backed by Kedara Capital.
Business strategy
Vishal Mega Mart's growth and market presence
Vishal Mega Mart, famous for its affordable offerings such as ₹99 apparel and cheap groceries, has a pan-India network of 645 stores.
The company mainly caters to middle and lower-middle-class consumers with an emphasis on smaller cities where quick-commerce is still nascent.
This has helped it establish a niche in India's ₹600 billion grocery and supermarket industry, shielding it from some issues of rivals.
Financial growth
Vishal Mega Mart's financial performance and investor interest
Ahead of its listing, Vishal Mega Mart showcased stellar financials with revenue growing at a compound annual growth rate (CAGR) of 26.3% to ₹8,912 crore in FY24, up from ₹5,589 crore in FY22.
The company's EBITDA increased to ₹1,249 crore while net profit remained at ₹462 crore in FY24.
This strong financial health along with focus on smaller cities and resilience to quick-commerce competition makes it an attractive opportunity for medium- to long-term investors according to experts.
Business expansion
Vishal Mega Mart's business model and growth strategies
Vishal Mega Mart serves middle and lower-middle-income consumers with 645 outlets across 414 cities.
The company offers a wide range of affordable merchandise in apparel, FMCG, and general goods with over 70% of its revenue coming from its private label brands.
The company is also driving same-store sales growth by expanding product assortment and enhancing in-store experiences.
With promising growth potential and cost-efficient strategies, Vishal Mega Mart makes for a compelling investment opportunity.