External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

External broker reports(aggregated public sources)

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Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Thematic (Sector/Industry)

<div><ul><li>Recovery trends in discretionary categories are healthy - <span style="font-size: var(--content-font-size);">Our discretionary </span><span style="font-size: var(--content-font-size);">universe is expected to clock 11/2% revenue/EBITDA growth YoY (partly impacted by Omicron) in Q4FY22 (three-year revenue/EBITDA CAGRs of 15/17% respectively).</span></li></ul><div><div><div><ul><li>Ex-jewellery, margin recovery to lag revenue recovery: While profitability is recovering across categories, (1) high commodity prices, (2) restoration of rent/other SG&amp;A overheads coupled with intermittent demand disruptions are likely to keep margins (ex-jewellery) under pressure.</li></ul><div><div><div><div><ul><li>Channel checks: Value chain checks suggest the following: (1) in F&amp;G, international e-tailers, Reliance Retail, and quick commerce players have been improving their assortment availability and pricing mechanisms.</li></ul></div></div></div></div></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Recovery trends in discretionary categories are healthy - Our discretionary universe is expected to clock 11/2% revenue/EBITDA growth YoY (partly impacted by Omicron) in Q4FY22 (three-year revenue/EBITDA CAGRs of 15/17% respectively).Ex-jewellery, margin recovery to lag revenue recovery: While profitability is recovering across categories, (1) high commodity prices, (2) restoration of rent/other SG&amp;A overheads coupled with intermittent demand disruptions are likely to keep margins (ex-jewellery) under pressure.Channel checks: Value chain checks suggest the following: (1) in F&amp;G, international e-tailers, Reliance Retail, and quick commerce players have been improving their assortment availability and pricing mechanisms.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Consumer Discretionary Margin Recovery to Lag that in Topline

Equity Bottom-Up

<ul><li>V-MART Retail: V-MART reported 47% growth YoY.</li><li>Organic business (ex-Unlimited acquisition) recovered fully from the pandemic blues (INR5.74bn).</li><li>The recent stock price correction allows us to upgrade our rating on V-MART to ADD (earlier REDUCE), as risk-reward becomes more palatable.</li></ul><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

V-MART Retail: V-MART reported 47% growth YoY.Organic business (ex-Unlimited acquisition) recovered fully from the pandemic blues (INR5.74bn).The recent stock price correction allows us to upgrade our rating on V-MART to ADD (earlier REDUCE), as risk-reward becomes more palatable.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Berger Paints, Apollo Hospitals, Trent, Kansai Nerolac, V-MART Retail,...

External broker reports(aggregated public sources), ICICI Securities Ltd

ICICI Securities Limited

<p>V-Mart follows a cluster based approach of adding stores within a radius of 50-100 km. This gives it better economies of scales, supply chain efficiencies and better understanding of fashion needs of the specific region...</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

V-Mart follows a cluster based approach of adding stores within a radius of 50-100 km. This gives it better economies of scales, supply chain efficiencies and better understanding of fashion needs of the specific region...Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

V-Mart Ltd: Healthy Liquidity to Support Growth Aspirations

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<p>CarTrade Tech aims to raise around US$300m in its India IPO. The company is backed by Warburg Pincus and Temasek.</p>
<p>CarTrade Tech (CTT) is an online auto portal for sale of cars and two-wheelers in India. It is a multichannel auto platform with coverage and presence across vehicle types and value-added services through its various brands, namely: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz.</p>
<p>In 4Q21 (period ending March 21), its platforms had an average of 31.99m unique visitors per month and 814,316 vehicles were listed for auction in FY 2021. </p>
<p>Overall reported revenue grew by 96.9% in FY19 and was up another 22.6% in FY20. While 9M21 revenue points towards a YoY decline in revenue, its user growth has been progressively getting better throughout FY21 showing a strong rebound from COVID-19.</p>
<p>Although, most of the prior growth appears to have come via acquisitions. Were one to adjust for the acquisitions, the underlying growth doesn’t appear to be very strong.</p>

CarTrade Tech aims to raise around US$300m in its India IPO. The company is backed by Warburg Pincus and Temasek.
CarTrade Tech (CTT) is an online auto portal for sale of cars and two-wheelers in India. It is a multichannel auto platform with coverage and presence across vehicle types and value-added services through its various brands, namely: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz.
In 4Q21 (period ending March 21), its platforms had an average of 31.99m unique visitors per month and 814,316 vehicles were listed for auction in FY 2021. 
Overall reported revenue grew by 96.9% in FY19 and was up another 22.6% in FY20. While 9M21 revenue points towards a YoY decline in revenue, its user growth has been progressively getting better throughout FY21 showing a strong rebound from COVID-19.
Although, most of the prior growth appears to have come via acquisitions. Were one to adjust for the acquisitions, the underlying growth doesn’t appear to be very strong.

CarTrade Tech Pre-IPO - Acquisition Adjusted Growth Remains Low

Indian Accounting Research Analyst, Trudence Capital Advisors

Nitin Mangal

Indian Accounting Research Analyst

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Forensic Accounting

<div class="content-highlight">
<p><strong>A.G.E. analysis</strong> is one of our proprietary evaluation tool where we look to provide a 360 degree view on a particular company. Using our in depth experience, we aim to provide a qualitative and quantitative overview of Accounting, Governance and Earnings. It is a quick forensic check on company's balance sheet strength and governance using our very own expertise and research framework.</p>
</div>
<p><a href="https://www.smartkarma.com/entities/vmart-retail-ltd" target="_blank" data-smartkarma-citation="entities:1987:1" rel="noopener">Vmart Retail (VMART IN)</a> operates a chain of retail departmental stores in India, principally the Tier II and Tier III cities across the northern, eastern and western geographic regions of the country. The company engages predominantly in value-apparel retailing, while less than 10% of revenue also comes from kiranas, home furnishing, toys etc.</p>
<p>V-Mart has come a long way since its inception, and has lately put its foot on the aggressive expansion. The company has doubled its number of stores and total retail space within a span of five years, as it looks to tap the new cities and markets. However, the operational performance especially since F18 has been unsatisfactory to say the least. Revenue growth, margins and return ratios are all heading southwards. Even some of the key metrics such as transaction size, revenue and EBITDA per sq. ft., same store sales growth have deteriorated, and hence it seems that the operating leverage is not playing in favor of the company. The company also faces trouble from expensive recruitment and declining conversion rates.</p>
<p>V-Mart has not only been a victim of poor operational performance lately, but there are few accounting concerns as well seen in the balance sheet. V-Mart has been growing its inventory to a great extent the last 5 years which is why its cash conversion cycle has been elongated, unlike its peers. But more importantly, since the accounting/ valuation of inventory is done through FIFO method, (unlike the peers which use the weighted average method), increase in inventory has actually boosted the profitability.</p>
<p>Another accounting concern was noticed with respect to Ind AS 116- Leases, which is highly crucial for companies like V-Mart that have a leasing business model. The transition impact of Ind AS 116 has significantly lowered the PBT of the company, while generally it should more or less be the same. Upon deep dive, we have found that depreciation reported by the company is thought to be higher due to the estimates of useful lives.</p>
<p>Nonetheless, a bright spot was found with respect to FCFs that have been positive regularly lately, also giving importance to the peer comparison of important fundamentals, where V-Mart has emerged relatively stronger.</p>


A.G.E. analysis is one of our proprietary evaluation tool where we look to provide a 360 degree view on a particular company. Using our in depth experience, we aim to provide a qualitative and quantitative overview of Accounting, Governance and Earnings. It is a quick forensic check on company's balance sheet strength and governance using our very own expertise and research framework.

Vmart Retail (VMART IN) operates a chain of retail departmental stores in India, principally the Tier II and Tier III cities across the northern, eastern and western geographic regions of the country. The company engages predominantly in value-apparel retailing, while less than 10% of revenue also comes from kiranas, home furnishing, toys etc.
V-Mart has come a long way since its inception, and has lately put its foot on the aggressive expansion. The company has doubled its number of stores and total retail space within a span of five years, as it looks to tap the new cities and markets. However, the operational performance especially since F18 has been unsatisfactory to say the least. Revenue growth, margins and return ratios are all heading southwards. Even some of the key metrics such as transaction size, revenue and EBITDA per sq. ft., same store sales growth have deteriorated, and hence it seems that the operating leverage is not playing in favor of the company. The company also faces trouble from expensive recruitment and declining conversion rates.
V-Mart has not only been a victim of poor operational performance lately, but there are few accounting concerns as well seen in the balance sheet. V-Mart has been growing its inventory to a great extent the last 5 years which is why its cash conversion cycle has been elongated, unlike its peers. But more importantly, since the accounting/ valuation of inventory is done through FIFO method, (unlike the peers which use the weighted average method), increase in inventory has actually boosted the profitability.
Another accounting concern was noticed with respect to Ind AS 116- Leases, which is highly crucial for companies like V-Mart that have a leasing business model. The transition impact of Ind AS 116 has significantly lowered the PBT of the company, while generally it should more or less be the same. Upon deep dive, we have found that depreciation reported by the company is thought to be higher due to the estimates of useful lives.
Nonetheless, a bright spot was found with respect to FCFs that have been positive regularly lately, also giving importance to the peer comparison of important fundamentals, where V-Mart has emerged relatively stronger.

India

V-Mart Retail Limited owns, operates, and franchises a chain of family lifestyle stores in India. The Company operates medium sized hypermarket format retail stores that sell clothes, accessories, and footwear for men, women, and kids; cosmetics, luggage, toys, and games; and food, non-food, and staple items.

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V-Mart Retail (VMART IN)

Consumer Discretionary Margin Recovery to Lag that in Topline

Recovery trends in discretionary categories are healthy; Our discretionary universe is expected to clock 11/2% revenue/EBITDA growth YoY (partly...

HDFC Securities

HSIE Results Daily: Berger Paints, Apollo Hospitals, Trent, Kansai Nerolac, V-MART Retail,...

V-MART Retail: V-MART reported 47% growth YoY. Organic business (ex-Unlimited acquisition) recovered fully from the pandemic blues (INR5.74bn). 2...

HDFC Securities

V-Mart Ltd: Healthy Liquidity to Support Growth Aspirations

V-Mart follows a cluster based approach of adding stores within a radius of 50-100 km. This gives it better economies of scales, supply chain...

ICICI Securities Limited

CarTrade Tech Pre-IPO - Acquisition Adjusted Growth Remains Low

CarTrade Tech aims to raise around US$300m in its India IPO. The company is backed by Warburg and Temasek, and claims to be the most popular auto...

Sumeet Singh

Forensic Analysis: V-Mart Retail Ltd

V-Mart has grown aggressively over the recent years, but the said growth has not augured well for the company, yielding questionable returns along...

Nitin Mangal

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