Buy This Multibagger Small Cap Retail Sector Stock, Brokerage Sees 64% Upside

Ventura Securities is bullish on Aditya Vision Ltd. (AVL), sees 64% potential gains. The brokerage suggests ‘buy’ AVL for a target price of Rs 2,309 apiece. According to the brokerage’s estimated target price, the stock is likely to gain 64% in 24 months if the stock is purchased at the current market price. It is a small cap Retail sector company having a market capitalization of Rs 1,683.99 Crore.
Stock Outlook The current market price (CMP) of the stock is Rs 1,409 apiece on BSE. Today it opened at Rs 1,407.80, currently trading 0.70% above the previous close. The 52-week low of the stock is Rs 598.55 apiece and the 52 week high is Rs 1,528.70 apiece on BSE, respectively. Returns on Investment It has given 1.45% negative return in the past 1 week. Whereas, in the past 1 month, it gave 11.93% positive return. In the past 3 months, the stock gave a positive return of 89.64%. Over the past 1 year, it gave a positive return of 64.31%. In the past 5 years, it gave a whooping 2,744.6% positive return, respectively.   Bet on rising domestic demand for consumer electronics and home appliances AVL is among the fastest-growing electronic retail chains in Bihar. It has aspirations to expand its brand reach throughout the Hindi heartland through a presence of 155 retail stores. The Hindi heartland, prior to India achieving 100% electrification, was the most under-penetrated. As a result of this, the adoption of electronic devices/appliances was also the lowest. However, with India being nearly 100% electrified, we expect the Hindi heartland to sustain high growth adoption of consumer durables over the medium term. AVL by virtue of its strategy to focus on this geography will have a skewed high growth trajectory far ahead of other retail chains. Brokerage’s comments The brokerage said, “We expect AVL revenues/EBITDA/PAT to grow at a CAGR of 34.9%/28.8%/34.6% to INR 2,206.8/177.6/86.0 cr over the period FY22-25. We expect EBITDA margins to deteriorate from FY22 levels owing to new store expansion while net margins are expected to remain the same at FY22 levels.”The brokerage added, “Total debt of AVL is expected to increase only by INR 14.5 cr to INR 129.2 cr even though the company embarks on its store expansion strategy. We expect AVL to generate INR 602.8 cr in cash flows from operations over the next 3 years leading to a net debt-free status (net debt/equity at -1.0x in FY25).” Valuation- Buy for Rs 2,309 AVL has enjoyed high return ratios historically. However, these are expected to moderate slightly over the forecast period mainly due to acceleration in new store openings. “We project the return ratios RoE/RoCE at 32.9%/28.8% respectively in FY25,” the brokerage has said.”We initiate coverage on AVL with a BUY for a 24-month price objective of INR 2,309 (32.3X FY25 earnings) representing an upside of 58% from the CMP of 1,459,” the brokerage added. Disclaimer The stock has been picked from the brokerage report of Ventura Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.
The current market price (CMP) of the stock is Rs 1,409 apiece on BSE. Today it opened at Rs 1,407.80, currently trading 0.70% above the previous close. The 52-week low of the stock is Rs 598.55 apiece and the 52 week high is Rs 1,528.70 apiece on BSE, respectively.
It has given 1.45% negative return in the past 1 week. Whereas, in the past 1 month, it gave 11.93% positive return. In the past 3 months, the stock gave a positive return of 89.64%. Over the past 1 year, it gave a positive return of 64.31%. In the past 5 years, it gave a whooping 2,744.6% positive return, respectively.
AVL is among the fastest-growing electronic retail chains in Bihar. It has aspirations to expand its brand reach throughout the Hindi heartland through a presence of 155 retail stores. The Hindi heartland, prior to India achieving 100% electrification, was the most under-penetrated. As a result of this, the adoption of electronic devices/appliances was also the lowest. However, with India being nearly 100% electrified, we expect the Hindi heartland to sustain high growth adoption of consumer durables over the medium term. AVL by virtue of its strategy to focus on this geography will have a skewed high growth trajectory far ahead of other retail chains.
The brokerage said, “We expect AVL revenues/EBITDA/PAT to grow at a CAGR of 34.9%/28.8%/34.6% to INR 2,206.8/177.6/86.0 cr over the period FY22-25. We expect EBITDA margins to deteriorate from FY22 levels owing to new store expansion while net margins are expected to remain the same at FY22 levels.”
The brokerage added, “Total debt of AVL is expected to increase only by INR 14.5 cr to INR 129.2 cr even though the company embarks on its store expansion strategy. We expect AVL to generate INR 602.8 cr in cash flows from operations over the next 3 years leading to a net debt-free status (net debt/equity at -1.0x in FY25).”
AVL has enjoyed high return ratios historically. However, these are expected to moderate slightly over the forecast period mainly due to acceleration in new store openings. “We project the return ratios RoE/RoCE at 32.9%/28.8% respectively in FY25,” the brokerage has said.
“We initiate coverage on AVL with a BUY for a 24-month price objective of INR 2,309 (32.3X FY25 earnings) representing an upside of 58% from the CMP of 1,459,” the brokerage added.
The stock has been picked from the brokerage report of Ventura Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.