Indian retail segment looks attractive and is poised well for growth, as per the ICICI Direct Research report. The optimism is driven by healthy space addition expected in several top retail brands along with a higher focus on the omnichannel play -- physical and online.

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The brokerage firm recommends entry in certain stocks at current levels, citing favourable likely outcomes.  

“Recent stock price correction offers a good entry point to accumulate companies having healthy balance sheet and pan India presence and sustained long term revenue and earnings growth view.” 

The brokerage firm picked its top 4 buys from this category viz. Aditya Birla Fashion and Retail (ABFRL), VIP, Titan, and Trent were helped by attractive valuations and strong fundamentals. 

ABFRL – Target: 340 apiece; Upside: 42% 

New category launches in activewear and casual wear and robust store additions fuelled growth. Demand trends continue to be strong with major drivers being strong wedding season and revival of a formal portfolio with opening up of offices and ethnic space continues to be the next growth engine.  

The recent announcement of fund raise worth Rs 2195 crore to GIC, would enable ABFRL to meet its long-term capital needs and improve its competitive positioning. We believe ABFRL with lighter balance sheet and strong bouquet of brands is well placed to accelerate store addition. 

Trent – Target: Rs 1470; Upside: 39% 

Zudio has been Trent's new growth engine over the past couple of years. The growth got further accentuated in Q4FY22 despite omicron challenges. Westside continues to be one of the most capital efficient fashion brand. We pencil in 215 new store additions between Westside and Zudio for FY23-24E. In the long run, the company aims to grow its revenue at a CAGR of over 25 per cent. 

Robust performance during challenging times and industry leading performance will continue to warrant premium valuations for Trent. 

Titan – Target: Rs 2725, Upside: 33%  

Titan has, over the years, withstood challenges and emerged as a resilient player. Despite covid related challenges, Titan's jewellery division has recorded an impressive 17% revenue CAGR during FY18-22, whereas overall industry during the same period has shown zero to marginal growth.  

Titan has been a consistent compounder with the stock price increasing at 31 per cent CAGR in the last five years. Titan is a structural growth story and a key beneficiary of the unorganised to organised shift in the jewellery market.  

VIP – Target: Rs 770; Upside: 22% 

On improved travel and tourism scenario in India and improving domestic airline passenger traffic, VIP industries witnessed a healthy recovery in FY22 with revenues increasing 2x Year-on-Year. VIP is well geared up with inventory and ramping up the same to meet the demand, on strong revival. 

With demand green shoots visible, we expect VIP Industries to be a key beneficiary of increased movement of leisure and business tourist both domestically and internationally.