The family fashion store V-Mart enhances its in-house labels, while increasing offering of existing brands. Currently, it has 21 in-house labels, which contributes around 25 per cent of the sales. They would increase the ratio to 50 per cent over the next three years from the existing 25 per cent and also add more labels and expand the depth of the existing ones.
Presently, the tier 3 clusters contribute 55-60 per cent of its revenue and the company believes that it would go up to 75 per cent in next three years.
V-Mart’s expansion and IT development has helped it to carve out a market space for itself. The company’s plan to venture into the online retail will reap benefits in coming years as more people are now opting for online shopping. But it does face risk of competition with big brands coming into tier 2 and 3 cities. It has well positioned themselves as “price less fashion” to worry about the immediate effect.
Given, robust earnings growth (over 34 per cent annual growth over the next two years), low financial leverage and unparalleled opportunities in Indian retail space we, recommend a buy.
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