V2 Retail — Q3 FY26 earnings call

Call held 4 Feb 2026

Management summary

V2 Retail delivered a strong Q3 FY26, with revenue growing 57% year-on-year to ₹929 crores and PAT increasing by 99% to ₹102 crores. The company continued its aggressive expansion, adding 105 new stores in the first nine months of FY26, bringing the total to 294 stores. While sales per square foot saw a temporary dip due to the influx of new stores, management expects these to mature and contribute positively, supported by a successful ₹400 crore QIP and strategic vendor prepayments.

Highlights

  • Revenue grew 57% YoY to ₹929 crores in Q3 FY26, outpacing the broader market.

  • EBITDA increased 56% YoY to ₹174 crores in Q3 FY26, with an EBITDA margin of 18.7%.

  • PAT surged 99% YoY to ₹102 crores in Q3 FY26, surpassing the record FY25 full-year PAT.

  • Added 105 new stores in the first nine months of FY26, bringing the total store count to 294.

  • Return on Equity (ROE) improved to 24.5% in 9M FY26, up from 23.2% in FY25, reflecting disciplined capital allocation.

Concerns

  • A one-time write-off of assets with a carrying value of ₹5.06 crores was recorded due to physical verification.

  • Working capital days temporarily increased from 37 to 69 due to strategic prepayment of ₹300 crores to vendors.

  • Sales per square foot saw a slight dip due to the increased share of newer stores in the total portfolio, which take 2-3 years to mature.

Key financials

4 periods

Q3 FY26

  • Revenue
    ₹929 Cr
    YoY +57%
  • EBITDA
    ₹174 Cr
    YoY +56%
  • EBITDA Margin
    18.7%
  • PAT
    ₹102 Cr
    YoY +99%
  • SSSG
    2%

9M FY26

  • Revenue
    ₹2,270 Cr
    YoY +64%
  • EBITDA
    ₹346 Cr
    YoY +73%
  • EBITDA Margin
    15.3%
  • PAT
    ₹144 Cr
    YoY +119%
  • SSSG
    8.6%
  • ROE
    24.5%

end 9M FY26

  • Retail Space
    31.9 lakh sq ft

end Q3 FY26

  • Total Store Count
    304 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.

Capital allocation

high confidence
  • Capex Capex disclosed
    • CAPEX per store ₹1.1 Cr
    • Inventory investment per store ₹1.3 Cr
    The CAPEX per store is around Rs. 1.1 crore and the investment in inventory for that store is around Rs. 1.3 crores. Total investment is Rs. 2.4 crores to Rs. 2.5 crores.
  • Liquidity Liquidity disclosed QIP proceeds of ₹400 crores were used for general corporate purposes, including additional working capital and investment in regional warehouses. Approximately ₹300 crores were used to prepay vendors, securing a 1.5% monthly bill discount, which temporarily increased working capital days from 37 to 69.
    So, we raised around Rs. 400 crores from our QIP proceeds and the needs of those funds for capital allocation would have been over the period of the next 12 months. So, we always have a bill discounting feature available to our vendors. So, we prepaid our vendors about Rs. 300-odd crores because we want to be the best paymasters in the industry and we always want to be in their number one priority. So, we helped our vendors by giving them the bill discounting feature.

Guidance & targets

Revenue

  • Revenue growth Revenue · next year · High confidence at least a 50% revenue growth
    We guide for 8% to 10% SSSG for next year, and at least a 50% revenue growth, and adding at least 150 new stores.

    — Akash Agarwal

Store Expansion

  • New stores added Store Expansion · next year · High confidence at least 150 new stores
    We guide for 8% to 10% SSSG for next year, and at least a 50% revenue growth, and adding at least 150 new stores.

    — Akash Agarwal

SSSG

  • SSSG SSSG · next year · High confidence 8% to 10%
    We guide for 8% to 10% SSSG for next year, and at least a 50% revenue growth, and adding at least 150 new stores.

    — Akash Agarwal

Sales per Square Foot

  • Company blended sales per square foot Sales per Square Foot · ongoing · High confidence Rs. 1,000
    So, if you talk about company blended level, we are targeting it to maintain at a Rs. 1,000 per square feet, even when we are adding 50% more area every year. So, even if we achieve that, that will be a very good target.

    — Akash Agarwal

Gross Margin

  • Gross margin Gross Margin · going forward · High confidence 28% - 29%
    So, going forward also, we target a gross margin of 28% - 29%. And all the margin expansion should happen from operating leverage and from higher sales per square feet.

    — Akash Agarwal

Working Capital

  • Credit term / Payable days Working Capital · as and when we start using the funds for capital allocation and opening newer stores · Medium confidence 55 - 60 days
    Yes, that is correct. So, as and when we start using the funds for capital allocation and opening newer stores, you will see the credit term back to 55 - 60 days.

    — Akash Agarwal

Employee Expenses

  • Head office cost per square foot Employee Expenses · future · Medium confidence Rs. 15 - Rs. 16

    From Rs. 26 - Rs. 27 today

    So, our head office cost currently is around Rs. 26 - Rs. 27 and that is mostly employee expenses. So, I think it has the potential to come down to around Rs. 15 - Rs. 16. So, there is a scope of Rs. 10 per square feet reduction in the future.

    — Akash Agarwal

Cost of Retailing

  • Blended cost of retailing Cost of Retailing · near future · Medium confidence Rs. 180

    From Rs. 195 today

    I think we can target Rs. 180 in the near future.

    — Akash Agarwal

Omnichannel Sales Contribution

  • Sales from omnichannel Omnichannel Sales Contribution · when it matures · Low confidence around 5%
    And I think even when it matures, the sale from the channel should be around 5%.

    — Akash Agarwal

Q4 Store Additions

  • Total store additions in Q4 Q4 Store Additions · Q4 FY26 · High confidence 30-35 stores
    So, quarter four, I think the total addition would be around 30-odd stores. 30 to 35.

    — Akash Agarwal

What to watch in Q4 FY26

FY27 Revenue Growth

FY27
Current 64% (9M FY26)
Target At least 50%

Why it matters

Verifies the company's ability to sustain high growth amidst rapid expansion.

We guide for 8% to 10% SSSG for next year, and at least a 50% revenue growth, and adding at least 150 new stores.

Risks & concerns

  • Competition from online players

    medium

    Management believes pure online players cannot deliver the same value due to higher logistic and acquisition costs, and that physical retail offers an experience.

    Analyst downplayed

  • Employee retention for floor staff

    medium

    Retention of floor-level staff is a challenge across the industry due to low wages and frequent job changes for small raises, though head office attrition is under control.

    Analyst acknowledged

Q&A highlights

8 direct
Lease Accounting Change and Industry Alignment Direct
So, now we have linked it to store sales performance. So, every year there will be a review of the store yearly performance and that is how their lease period will be reassessed and updated in the accounting system. So, everyone including Trend, Vishal Mega Mart, Style Baazar, V-Mart, they all moved to this new accounting standard. So, we wanted to be at par with our peers and so, we took a decision along with our auditors to move to the same.

Explains a significant accounting change (re-estimation of lease tenures, resulting in an exceptional gain of ₹27.69 crores) and aligns the company with industry practice, impacting post-IndAS numbers.

Asked by Ankit Babel

Working Capital Management and Vendor Prepayment Strategy Direct
So, we raised around Rs. 400 crores from our QIP proceeds and the needs of those funds for capital allocation would have been over the period of the next 12 months. So, we always have a bill discounting feature available to our vendors. So, we prepaid our vendors about Rs. 300-odd crores because we want to be the best paymasters in the industry and we always want to be in their number one priority. So, we helped our vendors by giving them the bill discounting feature.

Clarifies the reason for the temporary increase in working capital days (from 37 to 69) and how QIP proceeds were strategically used to gain a 1.5% monthly discount from vendors, impacting gross margin.

Asked by Ankit Babel

Focus on Standalone vs. Consolidated Financials Direct
So, because now, we have shut down three manufacturing units. So, the numbers we should focus on for the future is standalone, but we are still liquidating the inventory left in our subsidiary and those inventory is being converted from fabric and accessories into finished goods. So, I was saying we are going to merge both the entities now. So, going forward, we should always focus on the standalone numbers, because we have almost liquidated and converted all the inventory. There is some left which will be done in the next six months.

Provides clarity on which financial statements (standalone) investors should focus on going forward, as the subsidiary operations are being wound down and merged.

Asked by Ankit Babel

New Store Performance and Contribution to EBITDA Direct
So, our older stores this year have already touched Rs. 1,200 per square feet of sales, which was the next ideal milestone for our business. And all the new stores that we opened last year, as well as all the new stores we have opened this year, both cohorts are performing better than Rs. 720 - Rs. 730 per square feet of sales. So, they are contributing to EBITDA from the first month of operations itself.

Details the performance of new stores relative to older, mature stores, indicating that new additions are contributing positively to EBITDA from the start, supporting the expansion strategy.

Asked by Ankit Babel

Gross Margin Strategy and EBITDA Focus Direct
So, our gross margin strategy is by design. We want to pass on most of the benefits to the consumer. So, we like having a metric that most matter to us is EBITDA margin. So, we would rather have more EBITDA margin by higher sales per square feet than higher gross margin. So, going forward also, we target a gross margin of 28% - 29%. And all the margin expansion should happen from operating leverage and from higher sales per square feet.

Explains the company's deliberate strategy to maintain lower gross margins to pass benefits to consumers, focusing instead on EBITDA margin driven by higher sales per square foot and operating leverage.

Asked by Ankit Babel

Sales per Square Foot Trajectory with Expansion Direct
So, if you talk about company blended level, we are targeting it to maintain at a Rs. 1,000 per square feet, even when we are adding 50% more area every year. So, even if we achieve that, that will be a very good target.

Addresses concerns about declining sales per square foot due to new store additions, providing a clear target and strategy to maintain overall sales efficiency despite rapid expansion.

Asked by Abhishek Sengupta

Competition from Online Players (Meesho) Direct
So, what you need to understand about pure online players is just logistic cost itself is around Rs. 65 to Rs. 70 in India, if you move goods from state to state. And then you add customer acquisition, you add tech costs, head office costs. So, the total cost, if you are selling a Rs. 250 t-shirt, it becomes almost 50% - 60%. But cost of retailing for us is around 18% to 19%. So, pure online cannot deliver the same value that we are delivering, just because of additional costs associated with online only players.

Management articulates a clear competitive advantage over pure online players due to lower cost of retailing and the inherent challenges of logistics and customer acquisition for online-only models in their price segment.

Asked by Abhishek Sengupta

SSSG Calculation Methodology Direct
No, we have always calculated SSG this way. So, for example, all the SSG that we calculated this year has been on stores that were operational throughout the last financial year. And we have used the same policy throughout our company history.

Clarifies the consistent methodology for calculating SSSG, which is crucial for investors to understand the organic growth metric.

Asked by Ankush Agrawal

3 min read 6 chapters

Detailed narrative

Strong Q3 FY26 Performance and Expansion Momentum

V2 Retail delivered a robust Q3 FY26, with revenue growing 57% year-on-year to ₹929 crores and PAT increasing by 99% to ₹102 crores. The company's operational strength was further evidenced by a 56% rise in EBITDA to ₹174 crores, achieving an 18.7% margin. This performance was supported by a 48% volume growth and 92% full-price sales, reflecting strong customer traction and effective product refresh cycles. For the nine months of FY26, revenue grew 64% to ₹2,270 crores, and PAT grew 119% to ₹144 crores, with ROE improving to 24.5%.

Aggressive Store Network Expansion and Performance

The company continued its rapid expansion, adding 35 new stores in Q3 and a net of 105 stores in the first nine months of FY26, bringing the total store count to 294 with 31.9 lakh square feet of retail space. Management plans to add at least 150 new stores in FY27, focusing on a balanced mix of rural market entry and deeper penetration in Tier-II and Tier-III cities. New stores are performing well, contributing to EBITDA from the first month of operations, with sales per square foot of ₹720-₹730 compared to ₹1,200 for mature stores, and the company targets to maintain a blended sales per square foot of ₹1,000.

Strategic Capital Allocation and Working Capital Management

V2 Retail successfully raised ₹400 crores through a QIP, with proceeds allocated to new store capital expenditure (₹1.1 crores per store), additional working capital (₹1.3-₹1.4 crores inventory per store), and investments in regional warehouses. Approximately ₹300 crores of the QIP proceeds were used for vendor prepayments, securing a 1.5% monthly bill discount. This strategic move temporarily increased working capital days from 37 to 69, but is expected to normalize to 55-60 days as funds are deployed for expansion.

Lease Accounting and Financial Reporting Clarity

The company re-estimated its lease tenures to align with industry practices and better reflect true profitability, resulting in an exceptional gain of ₹27.69 crores with a tax impact of ₹6.97 crores. This change primarily impacts post-IndAS numbers, with pre-IndAS figures remaining consistent. Management emphasized that standalone numbers should be the focus going forward, as subsidiary manufacturing units are being shut down and inventory liquidated, with a merger planned within the next six months.

Gross Margin Strategy and Cost Efficiency Initiatives

V2 Retail maintains a deliberate gross margin strategy of 28-29% to pass benefits to consumers, prioritizing EBITDA margin through higher sales per square foot and operating leverage. The company aims to reduce head office costs per square foot from the current ₹26-₹27 to ₹15-₹16 in the future. Additionally, the blended cost of retailing (including rent and OpEx) is targeted to decrease from ₹195 in Q3 to ₹180 in the near future, demonstrating a strong focus on operational efficiency.

Omnichannel Development and Competitive Advantage

The company is developing an omnichannel strategy, leveraging store inventory as dark warehouses for local deliveries, which is expected to significantly reduce logistics costs. Management believes pure online players face higher logistic and customer acquisition costs (₹65-₹70 per item for logistics alone), making it difficult for them to match V2 Retail's value proposition. Omnichannel sales are projected to contribute around 5% of total sales when the channel matures, providing a presence without significant additional fixed costs.

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