Ashish Kacholia Portfolio Stock Gets Buy Call For Huge 40% Upside: Do You Own?

In the consumer discretionary category, Aditya Vision (AVL) is a small-cap company. As of Friday's closing session, its market valuation was Rs 4,270.18 Cr. Although the stock has gained 128% over the last six months and produced a multibagger return of 131% YTD, Emkay Global, a brokerage firm, is bullish on the stock and has set a target price of Rs 5,000, pointing to a potential upside of 40% from the current market price of Rs 3550.05 as of Friday's closing session.

"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). Despite better growth prospects, valuation at 35x 1YF is at 35-50% discount to retail peers' and provides scope for re-rating," said the brokerage company Emkay Global.

"AVL would clock over 30% EBITDA CAGR during FY23-27E, higher than most best performing retailers'. Despite better prospects, AVL trades at a steep 35-50% discount to our coverage stocks, which is unwarranted, and delivery per our estimate should lead to its continued re-rating. Given higher concentration in Bihar and entry into new regions, we conservatively value AVL at 40x its Dec-25 EPS; recommend BUY," said the brokerage in a note.

"We expect AVL to deliver a 30%+ Revenue/EBITDA CAGR over FY23-27E, which is better than most of the best-performing retailers. EBITDA CAGR would largely be led by revenue growth, along with our expectation of stable margins. Medium-term prospects are also healthy, with entry into a large Uttar Pradesh market (potential similar to existing Bihar), scope for expansion in existing Bihar/Jharkhand regions, and potential entry into other Hindi heartland regions of Madhya Pradesh/Chhattisgarh, providing confidence for continued network expansion. SSG trends should remain encouraging, as the east is currently under-penetrated and growth trends are healthy with easy financing," the brokerage note further stated.

"The business has a very attractive payback period (On Friday, the shares of Aditya Vision closed on the BSE at Rs 3550.05 apiece. The scrip reached a 52-week-high of Rs 3,739.90 on (14/12/2023) and a 52-week-low of Rs 1,251.65 on (17/04/2023). During Q2FY24, the company registered promoters' shareholding of 61.19%, FIIs stake of 0.56%, DIIs stake of 4.60% and public stake of 33.65%. As per the shareholding pattern of Aditya Vision for the July to September 2023 quarter, ace investor Ashish Kacholia held 2,39,506 shares or a 1.99% stake in the company.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.