V2 Retail

V2 Retail reported a strong Q1 FY26, with revenue from operations accelerating by 52% year-on-year to INR632.2 crores. Net Profit (PAT) surged 62% YoY to a record INR30.6 crores, while EBITDA grew 63% to INR52.5 crores, improving the EBITDA margin from 7.8% to 8.3%. The company achieved a same-store sales growth (SSSG) of 5%, with a normalized SSSG of 10%, indicating robust organic performance. Return on Equity (ROE) reached 27.5% in Q1 FY26, a significant increase from 23% in FY25 and 10.7% in FY24, reflecting improved operational efficiency and capital allocation.

The company continues its rapid expansion, opening 28 stores and closing 1 in Q1, bringing the total store count to 216. An additional 9 stores have been added in Q2, reaching 225. V2 Retail targets opening 100-120 stores in FY26 and 130-150 in FY27. A Qualified Institutional Placement (QIP) is planned, not out of necessity, but to accelerate momentum, become debt-free, improve vendor terms, and invest in infrastructure and technology. The estimated cost per new store, including capex and inventory, is INR2.5 crores, with a total capex of approximately INR340 crores planned for FY26.

V2 Retail is leveraging data insights, agile merchandising, and a tech-enabled supply chain to drive efficiency. The company is reducing store warehouse area from 7-8% of floor space to 2-3% and aims to decrease inventory sales cover at stores from 10-12 days to 3-4 days. This optimization, supported by a new zonal warehouse in the East and an expanded hub-and-spoke model, enhances store operations, inventory management, and product availability, with replenishments now occurring once every 2 days for many stores.

Gross margin improved to 29.4% in Q1 FY26 from 28.8% in the prior year, driven by a favorable product mix, reduced marketing spend, and cost savings from consolidated fabric purchases. Management targets an EBITDA margin of 10% in the next two years, up from the current 8.3%. This improvement is expected from operating leverage, higher per square feet sales (targeting INR1,200 PSF at the national level in 3 years), and a continued focus on better full-price sales and product mix.

Operating primarily in Tier 2 and Tier 3 cities, V2 Retail sees significant growth opportunities, with plans to expand into new states and become a national retailer within 2-3 years. Despite increasing competitive intensity, the company believes its strong product offering, competitive pricing, and efficient supply chain allow it to maintain a leadership position in terms of per square feet sales and profitability. Management noted that the shift from unorganized to organized retail continues to fuel growth for organized players like V2 Retail.

To support its aggressive growth trajectory, V2 Retail has been actively hiring, expanding its business development team from 4 to 16 members and recruiting 3 key managerial personnel in the last three months. The company has also invested in technology platforms like Centric PLM and Centric Planning to automate process planning, replenishment, and assortment planning, aiming to reduce manual intervention and build a strong operational foundation for future expansion.