Motilal Oswal sees nearly 50% upside in Vishal Mega Mart as value fashion scales

Motilal Oswal says listed value-fashion retailers delivered about 25% revenue growth in Q1 FY27, aided by store expansion and margin gains. It has a Rs 165 target for Vishal Mega Mart versus Rs 975 for V-Mart, implying materially higher upside for Vishal.

— Source publishedThu, 27 Aug, 2026, 09:53 IST·First seen Thu, 27 Aug, 2026, 09:59 IST·Source Financial Express · BrandWagon

What happened

Vishal Mega Mart · Motilal Oswal is bullish on value-fashion retailers, citing resilient Q1 FY27 demand, faster store additions and improving profitability. It

Key facts

  • Motilal Oswal target price: Rs 165 for Vishal Mega Mart, implying nearly 50% upside
  • Motilal Oswal target price: Rs 975 for V-Mart Retail, implying roughly 13% upside
  • Four listed value-fashion retailers reported about 25% year-on-year revenue growth in Q1 FY27
  • Retail area grew nearly 20%; productivity improved around 4.5%
  • Aggregate pre-Ind AS EBITDA rose around 26% year-on-year; margin improved 10 bps to 9%
  • V-Mart EBITDA margin expanded around 75 bps; Vishal Mega Mart margin expanded around 25 bps
  • Four retailers opened 107 net new stores, taking combined network above 2,000 stores and 25.5 million sq ft
  • Vishal Mega Mart added 24 stores; V-Mart added 14
  • Expected high-teens revenue CAGR for both companies over FY26-29

Why this matters

The sector’s accelerating store rollout and margin gains reinforce the strategic value of scale, supply-chain efficiency and regional whitespace in value fashion.

What to watch

  • Quarterly same-store sales growth above or below management and brokerage assumptions.
  • New-store payback periods, mature-store productivity and signs of intra-network cannibalization.
  • Gross-margin movement versus discounting intensity and apparel input-cost trends.
  • Inventory days, markdown provisions and cash conversion during seasonal demand periods.
  • Consumer-spending data for lower- and middle-income households, especially rural demand and inflation-adjusted discretionary income.
  • Any acceleration in V-Mart, Reliance Retail, DMart Ready or regional-chain store openings in overlapping markets.
  • Management guidance changes on FY27/FY28 store additions, capex, margins or private-label penetration.
  • Track Vishal Mega Mart's same-store sales growth separately from new-store-led revenue growth.
  • Monitor EBITDA margin, private-label mix, inventory turns and working-capital intensity for evidence that scale is improving rather than diluting economics.
  • Compare net store additions, sales per store and return on capital with V-Mart, Reliance Retail and regional value-fashion competitors.
  • Assess whether supplier bargaining power shifts toward large organized chains, potentially improving purchase costs but pressuring smaller apparel vendors.
  • Watch for increased marketing, discounting and rental inflation as competitors seek to defend tier-2/3 catchments.

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