V2 Retail — Q1 FY26 earnings call

Call held 31 Jul 2025

Management summary

V2 Retail delivered a robust Q1 FY26 performance, marked by significant revenue and profit growth, driven by strategic store expansion and improved operational efficiencies. The company's focus on customer centricity, data-driven merchandising, and a tech-enabled supply chain has led to strong SSSG and enhanced profitability. Management expressed confidence in accelerating growth, supported by a planned QIP to fund further expansion and strengthen its operational model.

Highlights

  • Revenue from operations grew 52% YoY to INR632.2 crores.

  • Net Profit (PAT) surged 62% YoY to a record INR30.6 crores.

  • EBITDA increased 63% YoY to INR52.5 crores, with margin improving from 7.8% to 8.3%.

  • Same-store sales growth (SSSG) for the quarter was 5%, with normalized SSSG at 10%.

  • The company opened 28 stores and closed 1 in Q1, bringing the total store count to 216 by quarter-end.

  • Return on Equity (ROE) stood at 27.5% in Q1 FY26, up from 23% in FY25.

  • Full price sales contributed 92% of total sales, reflecting strong customer traction.

Key financials

  1. Revenue from Operations ₹632.2 Cr +52%YoY
  2. Gross Margin 29.4%
  3. EBITDA ₹52.5 Cr +63%YoY
  4. EBITDA Margin 8.3%
  5. PAT ₹30.6 Cr +62%YoY
  6. ROE 27.5%
  7. Same-Store Sales Growth 5%
  8. Normalized SSSG 10%
  9. Store Count 216 stores

What they filed

Q1 FY27: revenue up 58.3%, net profit up 50.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue380 591 499 630 705 +86%927 +57%798 +60%997 +58%
EBITDA31 111 57 90 86 +177%177 +59%113 +98%140 +56%
Net profit-3 51 7 28 18 +700%99 +94%18 +157%42 +50%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Revenue

  • Revenue Growth Revenue · going forward · High confidence 50%
    So we look at a 50% revenue growth going forward and in that we look at 8% to 10% SSSG so that's from the old stores and 40% revenue growth from the newer stores.

    — Akash Agarwal, Director and Chief Executive Officer

  • Revenue per Square Feet per Month (National Level) Revenue · next 3 years · Medium confidence INR1,200
    Even if we reach INR1,200 PSF at the national level old and new stores combined in the next 3 years, that would be amazing trajectory for the business.

    — Akash Agarwal, Director and Chief Executive Officer

Profitability

  • PAT Positive Profitability · this year · High confidence all quarters
    Yes, I think we should be PAT positive in all the quarters.

    — Akash Agarwal, Director and Chief Executive Officer

  • EBITDA Margin Profitability · next 2 years · Medium confidence 10%
    So the target is 10%, but anything over 8% is good because even an 8% EBITDA margin gets us a 24%, 25% ROE. But of course the target is to reach 10% in the next 2 years.

    — Akash Agarwal, Director and Chief Executive Officer

  • EBITDA Margin (at INR1,200 PSF) Profitability · High confidence 11%
    No, at INR1,200, it should be around 11%.

    — Akash Agarwal, Director and Chief Executive Officer

Store Expansion

  • Store Opening Target Store Expansion · FY '26 · High confidence 100 to 120 stores
    So this year, initially the target was 100 stores. I think we are on track. We should be opening about 100 to 120.

    — Akash Agarwal, Director and Chief Executive Officer

  • Store Opening Target (with QIP) Store Expansion · FY '26 · High confidence 120 to 125 stores

    Previously 100 to 120 stores → 120 to 125 stores

    Yes. So it will be dependent on whether we go ahead with the QIP and if that happens, then like I said, we will increase the store opening target this year by 20 to 25 stores and next year by 30 to 40 stores.

    — Akash Agarwal, Director and Chief Executive Officer

  • Store Opening Target (with QIP) Store Expansion · FY '27 · High confidence 160 to 190 stores

    Previously 130 to 150 stores → 160 to 190 stores

    — Akash Agarwal, Director and Chief Executive Officer

SSSG

  • SSSG Stabilization SSSG · going forward · High confidence 8% to 10%
    I think it should stabilize at 8% to 10%. That is our target even with a higher base.

    — Akash Agarwal, Director and Chief Executive Officer

  • SSSG Sustainability SSSG · next 3 to 4 years · High confidence 8% to 10%
    Yes, we would like it to be the same for the next 3 to 4 years.

    — Akash Agarwal, Director and Chief Executive Officer

Capex

  • Per Store Opening Cost (Capex + Inventory) Capex · High confidence INR2.5 crores
    So per store opening cost, including capex and inventory, is about INR2.5 crores.

    — Akash Agarwal, Director and Chief Executive Officer

  • New East Warehouse Investment Capex · High confidence INR25 crores to INR30 crores
    Yes. So there will be a total investment of I think INR25 crores to INR30 crores in that new warehouse.

    — Akash Agarwal, Director and Chief Executive Officer

  • Total Capex (including inventory) Capex · FY '26 · High confidence INR340 crores
    So we plan to open 120 stores this year so that is around INR300 crores of capex plus inventory required for those stores. And if you include technology, warehouse; that will be additional I think INR40 crores of capex.

    — Akash Agarwal, Director and Chief Executive Officer

ROE

  • ROE (with 8% EBITDA) ROE · High confidence 24%, 25%
    So the target is 10%, but anything over 8% is good because even an 8% EBITDA margin gets us a 24%, 25% ROE.

    — Akash Agarwal, Director and Chief Executive Officer

Operational Efficiency

  • Store Warehouse Area Reduction Operational Efficiency · High confidence 2% to 3%

    From 7% to 8% today

    So currently, the store warehouse takes anywhere between 7% to 8% of the floor area. And now that we're doing hub and spoke and the frequency has increased, we are reducing the warehouse area to just 2% to 3%.

    — Akash Agarwal, Director and Chief Executive Officer

  • Inventory Sales Cover at Store Operational Efficiency · High confidence 3 to 4 days

    From 10 to 12 days today

    So currently we keep about 10 to 12 days of sales cover at the store. We plan to bring it down to just 3 to 4 days except the display stock.

    — Akash Agarwal, Director and Chief Executive Officer

Risks & concerns

  • Risk of uncontrolled store expansion

    medium

    Analyst cited past bad experience (2017) with rapid expansion leading to poor SSSG. Management stated current expansion is phased, data-driven, and from a position of strength.

    Analyst downplayed

  • Competitive intensity in new geographies

    low

    Analyst asked if it's difficult to find new store locations due to competition. Management acknowledged competition but stated ample availability in Tier 2/3 markets and expansion into 25 states.

    Analyst acknowledged

  • Macroeconomic demand pressure

    low

    Analyst noted broader demand pressure in rural/Tier 2/3 markets. Management stated they've seen good traction, and their product/pricing strength and shift from unorganized to organized retail mitigate macro impact.

    Analyst downplayed

Q&A highlights

3 direct
QIP Rationale and Accelerated Store Expansion Direct
It's not out of necessity or weakness. We're doing it from a position of strength. Our business has delivered one of the best quarters in recent history and I think it's a proactive move because we want to accelerate our momentum and also future-proof our growth.

Analyst questioned the QIP given prior statements of not needing external capital; management clarified it's a strategic move from strength to accelerate growth and become debt-free.

Asked by Abhishek from AB Capital

Risk of Rapid Store Expansion Direct
So the next phase of expansion is always dependent on the execution of the previous phase. So the day we feel the newer stores are not within the benchmark of 30% of old stores, the old stores SSSG is going down or any of the metrics we see that it's not up to the mark; then we would just postpone and cancel the next expansion phase.

Analyst raised a critical concern about the risks of rapid store expansion, referencing past failures; management provided a detailed explanation of their phased, data-driven approach and current position of strength.

Asked by Ankush Agrawal from Surge Capital

Drivers and Sustainability of EBITDA Margin Improvement Direct
No. With our operating leverage, I think there is scope for the EBITDA margin to improve. So there are 3 levers for that to happen. So one is the head office and the warehouse cost will be distributed over a larger area. The second is moving the per square feet sale even higher with that 10% SSSG. And the third is better full price sale and a better product mix.

Analyst sought clarity on the sustainability of margin improvement; management detailed specific operational levers that will drive future EBITDA margin expansion towards their 10% target.

Asked by Aliasgar Shakir from Motilal Oswal Mutual Fund

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Highlights

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.

Aggressive Store Expansion and Capital Strategy

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.

Operational Efficiency and Supply Chain Enhancements

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.

Profitability and Margin Outlook

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.

Market Positioning and Competitive Landscape

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.

Talent and Technology Investments

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.

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