Vishal Mega Mart

Vishal Mega Mart reported robust Q3 FY26 results, with revenue from operations growing 17% year-over-year to ₹3,670 crores. Adjusted same-store sales growth (SSSG) stood at 9.6%. The company's EBITDA increased by 19.8% to ₹605 crores, leading to an EBITDA margin of 16.5%, up from 16.1% in the prior year. Net profit (PAT) also saw significant growth of 19.1% to ₹313 crores, with a PAT margin of 8.5%.

For the first nine months of FY26, Vishal Mega Mart achieved a revenue of ₹9,792 crores, marking a 19.9% growth over the previous year. The adjusted SSSG for this period was 10.3%, indicating consistent organic growth. EBITDA for the nine months reached ₹1,459 crores, a 24.4% increase, with the margin improving to 14.9% from 14.4%. PAT grew by 30% to ₹671 crores, resulting in a PAT margin of 6.9%.

The company maintained its accelerated new store opening momentum, adding 29 new stores in Q3 FY26, bringing the total to 80 new stores for the first nine months. This positions Vishal Mega Mart to exceed its annual guidance of 80-100 new stores. The expansion included 12 stores in South India (Kerala, Andhra Pradesh, Karnataka), 2 in Gujarat, 1 in Maharashtra, and 4 new small format stores, bringing the total small format stores to 10, which are performing decently with similar revenue per square foot and financial outcomes as larger stores.

Vishal Mega Mart's double-digit SSSG is primarily driven by three components: market share gains from mom-and-pop stores and other retailers, an increase in the average bill value from existing customers buying more items, and an improvement in average selling price through customer upgradation to higher price points. Approximately 70% of the growth is attributed to increased transactions and 30% to higher bill values. The company's deliberate strategy to introduce higher price points with improved fashionability and functionality in every category has contributed to this trend.

Management expressed optimism regarding consumer sentiment, driven by income tax and GST changes, expecting a positive impact on consumption demand. However, this impact has been partially 'camouflaged' in the last 2-3 months by external factors such as delayed winter, air quality issues in North India, and extended monsoons in Bombay. Despite these short-term challenges, the company believes that increased disposable income and lower prices will logically lead to higher consumption.

The company noted that the Q3 FY26 growth deceleration from Q2 was largely due to a festive timing change, with Durga Puja sales falling in Q2 this year compared to Q3 last year, impacting Q3 EBITDA and PAT. Minor issues like delayed winter in December had a small impact, although winter merchandise still achieved double-digit SSSG. Regional disruptions, such as the temporary shutdown in Assam during the Puja festival, also had localized effects.

Vishal Mega Mart continuously refurbishes its older stores every 6-7 years to maintain aspirational appeal, with 8-10 stores typically under refurbishment at any given time. The company also undertakes right-sizing initiatives, particularly in Karnataka, where some stores were oversized, to optimize revenue per square foot. These adjustments, along with infrastructure constraints causing temporary closures, contribute to the difference between reported and adjusted SSSG.