V-Mart Retail gains in trade; stock advances 26% in three sessions

For the quarter ended June 2020, V-Mart reported a loss of Rs 33.64 crore as against net profit of Rs 17.60 crore in the year-ago period.

Shares of V-Mart Retail advanced over 16 per cent to Rs 2,250 on the BSE on Friday as compared to around 1 per cent rise in the benchmark S&P BSE Sensex. 

At 12:16 PM, the stock was trading nearly 13 per cent higher at Rs 2,178. With today's rally, the stock has gained 25.8 per cent in three sessions.  

For the quarter ended June 2020, V-Mart reported a loss of Rs 33.64 crore as against net profit of Rs 17.60 crore during the previous quarter ended June 2019. Sales declined 82.77 per cent to Rs 78.06 crore during the period as against Rs 453.05 crore in the year-ago period. READ MORE

"V-Mart Retail’s (VMart) Q1FY21 revenue and earnings before interest, taxes, depreciation, and amortisation (EBITDA) came significantly below our estimates – 83 per cent YoY revenue dip (Same-store sales growth: -84.7 per cent YoY) and an EBITDA loss of Rs 8 million," notes Edelweiss Securities. 

The quarter’s performance was impacted due to the lockdown, with stores operating only for a third of the quarter, resulting in nearly 87 per cent dip in footfalls at stores. The company has negotiated rental payments with its developers and expects Rs 180 million in savings to happen in FY21, the brokerage observes. 

"Though we anticipate near-term challenges (to sales/inventory), better rural incomes, the decline in competition and strong balance sheet will keep it in good stead. We reiterate VMart is a play on rural recovery and value retailing, and will potentially outshine other value retailers in the ongoing crisis, Edelweiss Securities said.

It has a "BUY" rating on the stock with the target price of Rs 2,230.