Emkay Global Financial's research report on Aditya Vision
Aditya Vision (AVL), a consumer-durable retailer, holds leadership share of over 50% in Bihar/Jharkhand, aided by low penetration so far, curated assortment, competitive pricing, Buy & Win scheme, and impeccable service/consumer trust. AVL has passed the litmus test of scale and is now a well-oiled machine to pursue the 5x expansion opportunity in six states of the Hindi Heartland. SSG should remain above 20% in the near term, led by maturing of new stores and low penetration. AVL’s payback period of under 3yrs is ‘better-than-the-best’ in other retail formats. We expect AVL to post a strong, revenue-led EBITDA CAGR of over 30% during FY23-27E and in the mid-teens over FY27-35E. Maturing of new stores should lead to better asset sweating and allied ROIC gains (1,000bps+ in FY23-27E).
Outlook
Despite better growth prospects, valuation at 35x 1YF is at 35-50% discount to retail peers’ and provides scope for re-rating. We initiate coverage on AVL with BUY and Dec-24E TP of Rs5,000 (40x Dec-25 EPS).
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Aditya Vision - 11 - 12 - 2023 - emkay