Aditya Vision - Spreading Tentacles In The Hindi Heartland: Systematix Initiates Coverage With A 'Buy'

Systematix Research Report

We initiate coverage on Aditya Vision Ltd. with a 'Buy' rating, and a target price of Rs 5,070, based on 40 times FY26E earnings, implying 21 times FY26E enterprise value/Ebitda.

Aditya Vision trades at a similar valuation to peer, Electronics Mart India Ltd. despite better return ratios, operating metrics and growth opportunity and other listed retailers as well, with scope for further rerating, despite its recent outperformance.

Aditya Vision was incorporated in 1999 as an emerging consumer durables retailer, currently dominates the Bihar market. The company is in the process of replicating its model (wider assortment at competitive prices), effectively backing it with excellent customer service in the underpenetrated markets of the Hindi heartland.

It enjoys 50% plus market share in Bihar, is a market leader in Jharkhand (despite having entered this market in FY22) and has made successful in roads into the eastern Uttar Pradesh market in FY23 (to multiply its addressable market).

An aspiring large population, surging electrification in tier II, III markets, and availability of easy finance are key factors that drive the strong demand for consumer electronics in the Hindi belt.

Aditya Vision has attracted 100 plus leading durable brands through focus on customer service and shopping experience to create strong brand equity and a loyal first-time customer base.

These brands provide it with preferential terms of trade, given the possible premiumization and cross-sell opportunities. An enviable track record of best-in-class store metrics, payback period and zero store closures, despite accelerating footprint expansion, make us sanguine on Aditya Vision’s execution and business development capabilities.

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