Russian Fix Price, the fastest growing variety value retailer globally, is set to more than triple in the next five years, from 2020 sales of RUB190bn ($2.5bn) and net income of RUB17.5bn, VTB Capital (VTBC) argued on April 14.

The company is the absolute leader on the Russian variety value retail market (VVRM), with a 93% market share and over 4,200 stores, and is set to disrupt the retail market at scale, VTBC analysts believe.

As reported by bne IntelliNews, Fix Price went public on March 5 at a price of $9.75/GDR, implying market capitalisation of $8.3bn, with the shareholders raising $1.7bn and bringing the free float to 21.3%.

Fix Price is the leader on the variety value retail market, holding a 93% share in Russia, and is expected to keep its leading position, as it is 13x bigger than all the other players combined.

As Fix Price sees VVRM’s potential at 15,500 stores in the next 15 years, and offers a rapid growth profile (2021-2025 forecasted annual growth of 19%), VTBC notes, while believing that the concept based on constant stock rotation and low prices has proved its resilience, has limited rivalry with e-commerce and is underpenetrated across Russia. 

VTBC thus initiates a Buy call on Fix Price shares with 12-month target price based on 2021 forecasted Enterprise Value/EBITDA for Western peers (16.8x) that results in $14/GDR and an estimated total return of 51%.

Key downside risks for the company are a hit to the economy and/or ruble, greater rivalry in VVRM segment, and the sustainability of returns, VTBC warns. bne IntelliNews previously profiled the company in an interview with the company’s CEO Dmitry Kirsanov prior to the IPO in October last year.