Vishal Mega Mart's focus on building strong brands, enhancing customer loyalty to drive growth

Vishal Mega Mart Ltd is set to hit Dalal Street on Wednesday by launching an Initial Public Offering (IPO) to raise Rs 8,000 crore from the primary market. The Indian retailer said that it is raising the funds to grow the portfolio of its brands to meet the evolving consumer preferences and aspirations.

"We aim to continue to introduce new products and our own brands and increase the span and penetration of our existing brands, thereby enhancing our proposition to our consumers," the retailer mentioned in its Draft Red Herring Prospectus (DRHP).

Founded in 2001, Vishal Mega Mart has a total of 626 stores as of June 30, 2024, across 403 Tier 1 cities, Tier 2 cities, and beyond in India. According to the retailer of apparel, general merchandise, and fast-moving consumer goods (FMCG), it aims to optimize returns on marketing expenditure by expanding store presence within the current market.

During the three-month period ended June 30, 2024, and FY 2024, 2023, and 2022, Vishal Mega Mart incurred advertising and sales promotion expenses amounting to Rs 12.7 crore, Rs 59.6 crore, Rs 58.4 crore, and Rs 34.5 crore, respectively. The hypermarket chain said that an increase in advertising and sales promotion expenses in FY 2023 was due to a hike in the scale of its business.

The company said that its marketing and brand-building initiatives are targeted at enhancing brand awareness, strengthening brand recall among consumers, and promoting our theme of making aspirations affordable.

Vishal Mega Mart's 19 brands recorded sales exceeding Rs 100 crore each in FY 24, with six brands recording sales exceeding Rs 500 crore each.

Vishal Mega Mart does not manufacture any products that are sold in its stores and instead relies entirely on third-party vendors to manufacture all products under its own brands. As of June 30, 2024, the company has a total of 26 brands, which also includes 5 apparel brands, 4 general merchandise brands, and 8 FMCG brands, among others.

Vishal Mega Mart IPO opens for public subscription from December 11 to 13, set at Rs 74 to Rs 78 per share. The IPO's allotment is expected to be finalized on December 16. The company has reserved 50% of the net offer for Qualified Institutional Buyers (QIB), 35% of the issue for Retail Investors, and 15% of the offer for Non-Institutional Investors (NII).