Vishal Mega Mart IPO GMP zooms 32% ahead of launch; Should you subscribe?

Vishal Mega Mart IPO opens for public subscription on Wednesday, December 11, 2024, and will remain available for subscription until Friday, December 13, 2024

Vishal Mega Mart IPO GMP zooms: The unlisted shares of Vishal Mega Mart were commanding a strong premium in the grey market ahead of the launch of its initial public offering (IPO). Sources tracking grey market activities revealed that Vishal Mega Mart shares were trading at Rs 103 apiece, reflecting a grey market premium (GMP) of Rs 25 or 32.05 per cent per share against the upper end of the IPO price band of Rs 78.

 

Notably, Vishal Mega Mart IPO is set to open for public subscription on Wednesday, December 11, 2024. The Rs 8,000 crore public offering, which will remain available for subscription until Friday, December 13, 2024, comprises a complete offer for sale (OFS) of 1,025,641,025 shares.

 

 

Vishal Mega Mart IPO will be available at a price band of Rs 74-78 per share. The IPO has a lot size of 190 shares, allowing investors to bid for a minimum of 190 shares or in multiples thereof. A retail investor would require a minimum of Rs 14,820 to bid for one lot or 190 shares of Vishal Mega Mart IPO. For a maximum bid of under Rs 2,00,000, retail investors can apply for up to 13 lots, totaling 2,470 shares. 

Watch Vishal Mega Mart IPO Analysis in Glance

 

The basis of allotment of Vishal Mega Mart IPO shares is likely to be finalised on Monday, December 16, 2024, with shares credited to investors' demat accounts by Tuesday, December 17, 2024.  Vishal Mega Mart shares are expected to list on the BSE and NSE on Wednesday, December 18, 2024.

 

KFin Technologies serves as the registrar for the Vishal Mega Mart IPO. The book-running lead managers for the public issue include Kotak Mahindra Capital Company, ICICI Securities, Intensive Fiscal Services, Jefferies India, JP Morgan India, and Morgan Stanley India.

 

Notably, the company will not receive any proceeds from the offer for sale by the promoter selling shareholder. The promoter selling shareholder will be entitled to the entirety of proceeds from the offer for sale after deducting its portion of the offer-related expenses and the relevant taxes.

 

Vishal Mega Mart IPO review

Vishal Mega Mart has garnered reviews from several brokerages, including Bajaj Broking, Swastika Investmart, Master Capital Services, Choice, and AUM Capital. Market analysts remain optimistic about the public offering from a long-term perspective.

 

Should you subscribe to the Vishal Mega Mart IPO?

 

Choice - Subscribe for the long-term

Brokerage firm Choice, in its report, has recommended investors subscribe to the Vishal Mega Mart IPO for the long-term perspective. "Over the years, the company’s top and bottom lines have steadily increased. The company's main target is Tier-2 cities, which are expected to grow their diversified retail sector at a 32 per cent CAGR between CY23 and CY28."

 

At the higher price range, the brokerage noted, Vishal Mega Mart is demanding an EV/Sales multiple of 3.8x, which seems fully priced. "However, the company has demonstrated steady growth in its revenues due to increased store numbers and its own brand sales, which positively impact margins. Strong inventory and working capital management give the company a sustainable long-term outlook." 

AUM Capital - Subscribe for the long-term

Analysts at AUM Capital have also recommended subscribing to the public offering for the long-term. "Rising disposable income and a preference for quality and hygienic products among the population give established companies like Vishal Mega Mart an edge over the unorganised sector and stiff competition to other branded retail chains like Spencer’s and Reliance Smart Bazaar," analysts wrote in a research report.  The company’s strong financials and debt-free status provide additional impetus, they added.

 

Master Capital Services - Subscribe for the long-term

Analysts at Master Capital have also recommended subscribing to the public offering from a long-term perspective. They noted that Vishal Mega Mart, as a leading retail destination for middle and lower-middle-income consumers, sits at the centre of opportunity.  "The company aims to drive same-store sales growth through various initiatives, including product portfolio expansion, hyperlocal offerings, leveraging technology and loyalty program data, and enhancing in-store experiences," the report said.

 

Bajaj Broking - Subscribe for the long-term

Analysts at Bajaj Broking have also recommended subscribing to Vishal Mega Mart IPO for the long-term. In a research note, they highlighted that the issue is priced at a P/BV of 5.94 based on its NAV of Rs 13.14 as of September 30, 2024, and post-IPO NAV.  "If FY25 annualised earnings are attributed to its post-IPO fully diluted paid-up equity capital, the asking price corresponds to a P/E of 69.03," they said. Based on FY24 earnings, the P/E stands at 75.73, indicating an aggressively priced issue.

 

Swastika Investmart - Suitable for high-risk investors

Swastika Investmart, in its report, said that the IPO is suitable for high-risk investors seeking exposure to the retail sector. Vishal Mega Mart, as one of India’s leading offline retailers, has a strong market position, according to the brokerage. They also said that the IPO’s valuation is reasonable.

 

About Vishal Mega Mart

Vishal Mega Mart is a one-stop destination for middle and lower-middle-income consumers in India. It offers a diverse range of merchandise through its portfolio of own brands and third-party brands to fulfil both aspirational and daily needs of its customers.