Long runway for growth in the INR70t aspirational retail industry

 The tier 2+ towns account for ~74% of India’s retail spends (~INR56t), which remains largely dominated by unorganized retail (~90% share).  However, rising brand awareness, store expansion by organized retailers, and greater focus on better-quality products have led to a marked shift toward organized, one-stop shopping destinations, even in semi-urban and rural India.  VMM is a play on rising consumption and aspirations in Tier 2 and beyond India. Its well-diversified category mix and the lowest opening price points enable it to serve ~1b middle- and low-income consumers, representing ~INR70t aspirational retail market (as of CY23).

Healthy store economics create room for accelerated store expansions

VMM’s retail footprint spans 696 stores over 12m sq ft across 458 cities. It operates a big-box retail format, with an average store size of ~17.5k sqft.  During FY22-24, VMM added ~55 net stores annually. However, the pace of store additions has accelerated, with ~85 net stores added in FY25.  The company’s efficient working capital management, superior cost controls, and disciplined asset-light approach have enabled strong store economics with ~15% pre-IND-AS EBITDA margin at the store level, over 50% RoCE, and a payback period of less than two years.  Management has indicated that VMM could potentially add 100 stores annually over the next ~15 years across 50 tier 1 cities and 1,250 tier 2 cities with populations exceeding 50k.  Given the long runway for growth, strong store economics, and entry into newer territories, we believe the pace of store additions will likely remain elevated over FY26-28, as VMM expands its presence in states such as Tamil Nadu, Gujarat, and Maharashtra.  Overall, we build in ~13% CAGR in store additions for VMM over FY25-28, taking the total store count to 1,000 by FY28.

Well-diversified portfolio enhances VMM’s TAM and share of wallet

 VMM boasts a well-diversified category mix with over 25% revenue contribution from three major categories—Apparel, FMCG, and GM.  Comparatively, other value-focused retailers mainly target either apparel (Zudio, V2Retail, Style Baazar, and V-Mart) or grocery (DMart).  VMM’s diversified category mix makes it a one-stop destination for the entire family, expanding its total addressable market (TAM) and driving higher wallet share among consumers.  The GM and FMCG sections are typically located on the upper floors of VMM stores. Although these categories have lower gross margins compared to Apparel, they serve as a footfall driver for VMM.

SWOT ANALYSIS

Financial performance

Key risks and concerns

 Dependence on third-party vendors for manufacturing of own brands (73% revenue share)  Rising competition from other offline and online value retailers  Inflationary risks and inability to pass on price hikes  Sales concentration in select states  Follow-on stake sales from promoters (private equity-backed) and a lack of clarity on long-term ownership

Multi-category, own-brand portfolio acts as a strong moat for VMM

 VMM has successfully established a diverse and expanding portfolio of 26 own brands across key consumption baskets, with revenue contribution from these brands steadily rising to 73% by FY25.  In FY25, 19 of VMM’s own brands surpassed INR1b in sales, with six brands exceeding INR5b, demonstrating strong brand acceptance. VMM’s own brands typically offer the lowest opening price points, which makes them attractive for value-conscious consumers.  VMM operates a 100% private label portfolio across men’s, women’s, and kids’ fashion, covering a wide range of categories such as denim, ethnic wear, innerwear, and sportswear.  The company has significantly expanded its own brand offerings in GM under the ‘Tandem’ brand for home appliances, introducing products such as air fryers, garment steamers, sound bars, and kitchen tools.  VMM’s private labels account for ~35% of its FMCG revenue and hold ~45% share in categories where they are present. Moreover, the volume share is significantly higher, given the 20-50% price discount vs. leading brands.

Valuation and view

 We expect VMM to post a revenue/EBITDA CAGR of 19%/20%, driven by: 1) ~13% CAGR in store additions, 2) consistent double-digit SSSG, and 3) modest operating leverage benefits.  Given VMM’s debt-free balance sheet, robust cost controls, and tight working capital management (~15 days net-working capital), we expect ~24% PAT CAGR.  Over FY25-28, we expect VMM to generate a cumulative OCF/FCF of ~INR32b/ INR23b, which should enable accelerated store expansions.  We believe the company’s diversified category mix, ownership of opening price points, significant contribution from its own brands, and lean cost structure provide it with a strong moat against intense competition from both offline and online value retailers.  We initiate coverage on VMM with a BUY rating and a TP of INR165, premised on DCF-implied ~45x Sep’27E pre-IND AS 116 EV/EBITDA (implying ~31x Sep’27E reported EBITDA and ~69x Sep’27E P/E). Our DCF-implied multiples are at ~4-7% premium to VMM’s average trading multiples since the listing.  Based on our reverse DCF analysis (10.5% risk-free rate, 6.5% terminal growth rate), our TP of INR165/share implies ~11%/13% revenue/pre-INDAS 116 EBITDA CAGR over FY25-50E, driven by ~115 store additions annually and ~4% CAGR improvement in store productivity.  Despite strong performance since the listing (up 75% from IPO price), we believe the risk reward remains attractive (bull: INR210/share; bear: INR120/share)

Vishal Mega Mart 90-110
Expected level 135
Support 88

Good morning

The Ramco Cements Limited Company Details Report

The Ramco Cements Limited is a flagship company of the Ramco Group and is headquartered in Chennai. It is an Indian cement manufacturer with an installed annual production capacity of 24.3 MTPA (million tonne per annum) and 15.9 MTPA of clinker capacity as on 31st March 2025 and ready-mix concrete has installed capacity of 56 m3 per hour. The satellite grinding units are promoted very near to the market so that the distributors can meet demand of the consumers locally. It catered to more than 9,400 dealers and more than 23,500 sub dealers as on 31st March 2024. Its regional distribution of cement capacity as on 31st March 2025 was as follows- 50% Tamil Nadu, 33% Andhra Pradesh, 9% West Bengal, 8% Odisha and 1% Karnataka It manufactures and markets OPC (Ordinary Portland Cement) grade to multiple types of blended cement, ready mix concrete and dry mix products. The company has integrated cement plants and grinding units situated in Tamil Nadu, Andhra Pradesh, West Bengal, Karnataka and Odisha. The integrated cement and grinding units' capacity state wise as on 31st March 2024 was Tamil Nadu 51%, Andhra Pradesh 31%, West Bengal 9%, Odisha 8% and Karnataka 1%. Major cement brands of the company are Ramco Supercrete, Ramco Supergrade, Ramco Sulphate Resisting Cement and Ramco SuperFast. Its captive power capacity stood at 166 MW of wind power, 175 MW of thermal power plants capacity and 43MW waste heat recovery system (WHRS) 43 MW as on 31st March 2024. Green power capacity increased to 211 MW as on 31st March 2025.

Cost analysis

Ramco Cements products

Cement Sales volume

#SALES #GROWTH

The company generated a revenue of ₹8,518 cr in FY25, it decreased by 9% YoY. The sales volume during the period stood at 18.5 MT (including 0.33 MT from construction chemicals), it was higher by ~1% on a YoY basis. In the same period, blended realization declined by 10% YoY to ₹4,604 per tonne. Share of Ordinary Portland Cement (OPC) and B2B sales in FY25 was as follows– 31% and 34%, respectively. In FY25, the cement capacity was increased by 1.3 MTPA toto 24 MTPA. In FY24, the sales volume of cement increased by 21% YoY and stood at 18.1 MT. The revenue registered was ₹9,376 cr up by 15% YoY. The cement capacity utilization for the FY24 is at 83%. In Kolimigundla railway siding will be commissioned in September 2024. The new units for dry mix products in Andhra Pradesh is ready for commercial production and another unit in Orissa is expected to be commissioned in September 2024.

#EBITDA #GROWTH

In FY25, EBITDA per ton was ₹690, lower by 20% on a YoY basis. The company generated an EBITDA of ₹1,595 cr in the same period, it de-grew by 20% YoY. The cost of producing a tonne of cement reduced by 7% YoY to ₹3,915. Lower EBITDA can be attributed to lower realisation in South and East markets. In FY24, the EBITDA stood at ₹1,595 cr and EBITDA per ton stood at ₹867 compared to ₹796 in FY23. The power & fuel cost per ton of cement for FY24 has decreased to ₹1,389 compared to ₹1,771 in FY23. The change in utility of sale of wind power to captive use has also helped to reduce the overall power cost. The overall green power usage has significantly improved from 22% in FY23 to 34% in FY24 in view of change in utility of wind power to captive purposes. Cost of raw materials increased by 5% YoY from ₹903 to ₹948 per ton for the current year due to inflationary impact on procurement cost.

#PAT #GROWTH

In FY25, they generated a PAT of ₹268 cr. On a YoY basis PAT declined by 32%. During the period, finance cost and depreciation increased by 10% and 8% YoY, respectively. Increase in finance cost and depreciation was on account of commissioning of new capacity. During the quarter and year ended 31st March 2025, PAT included profit on sale of investments and surplus land of ₹199.4 cr (after consolidation adjustments) and profit on sale of investment and surplus land amounting, which was accounted as exceptional item. In FY24, the PAT stood at ₹394 cr. There was an increase in finance cost & depreciation on account of commissioning of units in JPM Line III, Kolimigundla, R RNagarLine III and Dry Mortar Plants.

#EBITDA #MARGIN

In FY25, EBITDA margin contracted by 222 bps YoY to 14.5%, this was on the back of reduced realisation along with a 109 bps YoY reduction in gross margin, which stood at 32.5%. Furthermore, employee cost as a percentage of net revenue from operations increased by 59 bps YoY to 6.5%; logistics cost increased by 209 bps YoY to 24.3% and other expenses increased by 53 bps YoY to 11.6%. However, power and fuel cost decreased by 209 bps YoY to 24.3%. Average lead distance during the year was 260 km v/s 280 km in FY24 and rail share of cement dispatches was ~9%, an increase of 100 bps YoY. In FY24, the EBITDA margin 16.7% v/s 14.5% in FY23. Decreasing fuel and power cost led to an positive impact on the EBITDA margins, Higher demand during the year led to higher plant capacity utilization which led to higher operating leverage.

#PAT #MARGIN

For the year ended 31st March 2025, PAT margin was 3.1%, it contracted by 105 bps YoY. Effective tax rate during the period was lower to 16% due to deferred tax expense, however there was zero current tax liability. In FY24, the PAT margin remained flat on a YoY basis at ~4.2%. Effective tax rate during the year was ~27% as against 28% in FY23.

#ROCE

In FY25, return on capital employed is envisaged to reduce due to reduced profitability lead by a weak demand environment. In FY24, the EBIT stood at ₹958 cr and capital employed was at ₹12,298 cr. EBIT increased by ~34% and during the same period increase in capital employed was ~7% due to which the ratio improved by ~164 bps on aYoYbasis to 8.2%.

#ROE

As on 31st March 2025, net worth increased by 3% YoY to ₹7,442 cr and net profit decreased by 32% YoY to ₹268 cr. For the year under review, ROE is anticipated to be ~3.7% due to reduced profitability and asset turnover ratio. In FY24, the net worth was at ₹7,238 cr and the net profit stood at ₹394 cr. The ratio registered a slight increase from 5.07% in FY23 to ~5.6% in FY24. Increase in ROE was due to higher financial leverage and marginally better asset utilization.