V2 Retail Limited

Financial Performance Highlights (Q1 FY27)

Consolidated Performance (Ind AS):

  • Revenue: ₹997 crores, representing 58% year-on-year growth
  • Gross Margin: 28.6% (vs. 29.5% in Q1 FY26)
  • EBITDA: ₹139.5 crores, representing 60% year-on-year growth
  • EBITDA Margin: 14.0% (vs. 13.8% in Q1 FY26)
  • Profit After Tax: ₹41.9 crores, representing 70% year-on-year growth

Pre-Ind AS Performance:

  • Revenue: ₹997 crores (58% YoY growth)
  • Gross Margin: 28.6% (vs. 29.4% in Q1 FY26)
  • EBITDA: ₹79 crores, representing 51% year-on-year growth
  • EBITDA Margin: Approximately 8%
  • PAT: ₹50 crores, representing 64% year-on-year growth

Operational Metrics

  • Store Count: 381 stores as of June 30, 2026 (subsequently crossed 400 stores)
  • Retail Area: Approximately 40.7 lakh square feet
  • Q1 Store Additions: 57 new stores opened, 1 store closed (net addition of 56 stores)
  • Same Store Sales Growth (SSSG): Approximately 7.5% for Q1
  • Volume Growth: 56% during the quarter
  • Full Price Sales: Approximately 90% of total sales
  • New Store Performance: Operating at ~₹730-740 per square foot (34% less than mature stores)
  • Mature Store Performance: ~₹1,070-1,100 per square foot for stores >2 years old

Strategic Updates and Management Commentary

Expansion Strategy:

  • FY27 guidance maintained at 170-200 new store openings
  • Store capex increased to ₹1.2-1.22 crores per store (from ₹1.1 crores previously)
  • Expansion focused on Tier 2 and Tier 3 cities, with presence in 26 states
  • Payback period for new stores: 2.5-3 years
  • New stores break even and become profitable from first month

Working Capital Management:

  • Inventory days target: 90-100 days (currently elevated due to safety stock)
  • Creditor days target: 45-50 days
  • Company practices vendor prepayments with discounts, releasing ₹150-200 crores capital

Technology Initiatives:

  • Implementation of AI workflows and data lake migration to AI-enabled platform
  • AI-based CCTV monitoring for queue management at high-throughput stores
  • Automated replenishment system reducing inventory risk

Product Strategy:

  • Focus on fabric nomination and direct mill partnerships for quality standardization
  • Kids wear constitutes 25% of sales
  • Plan to increase MRPs by 4-5% from Q3 due to raw material cost inflation

Risk Factors and Mitigation

Geopolitical Impact:

  • Increased safety stock levels due to geopolitical tensions
  • Expected to normalize once situation stabilizes

Consumer Demand:

  • Management considers demand inelastic as they sell "necessity" products
  • Wedding dates and Adhik Maas affected Q1 demand patterns
  • Bulk of annual sales occurs during festive season (October-November)

Competition:

  • 80% of stores have 3-4 competing value fashion retailers in same vicinity
  • Focus on culture and ecosystem strength rather than fearing competition

Customer Experience Initiatives

  • Implementation of NPS system linked to store team incentives
  • AI-based queue management system with automatic notifications
  • Customer repeat rate improved from 40% to 55% over past 3 years

Acquisition Update

  • RK Retail acquisition completed around end of June 2026
  • Financial impact expected to be visible from Q2 FY27 onwards

Capital Structure and Funding

  • No plans for additional QIP or equity fundraising
  • Expansion to be funded through internal accruals and bank limits
  • Debt-to-equity ratio described as "pretty low" with headroom for additional borrowing

Forward Guidance

  • Revenue Growth: At least 50% for FY27
  • Gross Margin: 29-30% range
  • SSSG: 8-10% for full year FY27
  • EBITDA Margin: Maintain current levels despite expansion

Q&A Session Highlights

Analysts questioned management on:

  • Price hike impact on volume demand
  • Store expansion pace and funding
  • Gross margin contraction and sustainability
  • New store performance metrics
  • Customer experience improvements
  • Geographic expansion focus
  • Competitive landscape
  • Operating leverage potential