HSBC has initiated coverage on Vishal Mega Mart with a ‘Hold’ rating and a target price of ₹138, noting the company’s efficient operating structure, strong return profile, and solid growth potential—but also flagging that much of the upside is already factored in.
Vishal Mega Mart currently operates 696 stores, and HSBC sees potential for expansion up to 1,300 stores by FY28. The company’s store-level RoCE is over 40%, supported by a high private label mix, diversified merchandise offering, and focus on value-conscious Tier II and III towns.
HSBC says Vishal’s unique business model—featuring low average selling prices, wide SKU coverage across general merchandise, and strong supply chain execution—has helped it remain resilient amid the disruption facing other organized retailers.
However, the bank notes that the stock trades at a 65x PE, which, although at a 15% discount to Trent’s standalone business, reflects a fairly rich valuation for a company with a relatively lower growth profile. The brokerage therefore prefers to stay on the sidelines until a clearer margin and scale-up trajectory emerges.
