V2 Retail Limited Q4 & FY 2025-26 Earnings Conference Call Summary

NSE Symbol: V2RETAIL

Key Financial Performance Highlights

Q4 FY26 Performance (Year-on-Year):
  • Revenue: ₹797 crores, up 60% from corresponding quarter last year
  • EBITDA: ₹109 crores, up 89% from ₹57.5 crores in corresponding quarter last year
  • EBITDA Margin: 13.7% vs 11.6% in corresponding quarter last year
  • PAT: ₹17.5 crores vs ₹6.4 crores in corresponding quarter last year, representing record performance
  • Same Store Sales Growth (SSSG): 7.74%
  • Volume Growth: 53%
  • Full Price Sales Contribution: 89%
  • Store Additions: 33 new stores opened, 2 stores closed (net addition of 31 stores in quarter)
Full Year FY26 Performance (Year-on-Year):
  • Revenue: ₹3,067 crores, up 63%
  • EBITDA: ₹455 crores vs ₹258 crores, up 77%
  • EBITDA Margin: 14.9% vs 13.7% last year
  • PAT: ₹162 crores vs ₹72 crores, up 125%
  • Same Store Sales Growth: Approximately 8.6%
  • Volume Growth: 47%
  • Full Price Sales Contribution: 90%
  • Return on Equity (ROE): 26% vs 23.2% in FY25 and 10.7% in FY24
  • Net Store Addition: 136 stores for full year
  • Total Store Count: 325 stores with approximately 3.5 million square feet of retail space

Pre-IndAS Reporting Figures

Q4 FY26 Pre-IndAS:
  • Revenue: ₹797 crores (same as IndAS, 60% YoY growth)
  • Gross Margin: 30.3% vs 27.6% in corresponding quarter last year
  • EBITDA: ₹54 crores, up 98% YoY
  • EBITDA Margin: 6.8%
  • PAT: ₹25 crores, up 118% YoY
Full Year FY26 Pre-IndAS:
  • Gross Margin: 30.2% vs 29.2% last year
  • EBITDA: ₹277 crores, up 83% YoY
  • EBITDA Margin: 9%
  • PAT: ₹162 crores, up 87% YoY
  • Standalone PAT: ₹173 crores

Operational and Strategic Updates

Store Expansion Strategy:

  • Current store footprint crossed 350 stores nationwide
  • FY26 net addition of 136 stores
  • FY27 target: 170-200 new store additions
  • Expansion strategy focused on rural market entry and deeper penetration in Tier-2 and Tier-3 cities
  • New stores typically start at ₹750 per square feet sales, reaching maturity of ₹1,100-1,124 per square feet in 3-4 years
  • New stores become EBITDA positive from first month (breakeven at ₹500 per square feet)

Inventory Management:

  • Increased safety stock in March due to geopolitical tensions to ensure seamless availability
  • Targeting inventory maintenance at 90-100 days and creditors at 45 days
  • Inventory age profile: <5% over 1 year old, <24% over 6 months old, 76% less than 6 months old, 50% less than 3 months old
  • Off-season inventory (15% of seasonal inventory) is stored and sold next season rather than disposed

Category Performance:

  • Men's wear: 41-42%
  • Women's wear: 27%
  • Kids: 25%
  • Highest growing categories: kurtis, men's woven pajamas, men's casual shirts

Financial Position & Funding:

  • Store capex requirement: ₹2.6-2.8 crores per store (includes ₹1.2-1.3 crores capex and rest inventory)
  • FY27 expansion to be funded through internal accruals and existing cash balance
  • Healthy debt-to-equity ratio provides optionality for future debt funding if needed
  • Minimal marketing spend at 0.3% of revenue, focused on new store openings

Key Corporate Developments

Asset Verification & Write-off:

  • Completed physical verification of property, plant, and equipment
  • Written off assets with carrying value of ₹5.77 crores
  • This action resolved previous audit qualification

Accounting Policy Changes:

  • Changed policy for right-of-use assets and lease liabilities to align with industry practice
  • Now evaluating store performance for 2-3 years before long-term commitment
  • Changed depreciation policy for small items (nuts, hard tags, hangers) - now expensed immediately rather than capitalized (one-time impact of ₹6-7 crores)

Business Focus:

  • Moved away from in-house manufacturing operations
  • Now focused exclusively on retail business
  • Impact of new Labor Code already recognized and not material

Management Guidance and Outlook

Revenue Growth: Guided for at least 50% revenue growth over the next 2 years

Margin Guidance:

  • Gross margins to be maintained at 28-30%
  • Price increases of 3-4% expected to be passed to customers to maintain margins amid raw material cost increases
  • Company-level EBITDA margins expected to remain similar despite 50% area addition due to blend of mature and new stores

Expansion Plans:

  • Long-term vision to reach 2,500 stores in India
  • Currently present in 25 states with strategy to enter new states with 4-5 stores initially
  • Supply chain enhancement with zonal warehouses (Calcutta operational, south zone being finalized) and 18 hubs
  • Geographic expansion focus: 30-40% new stores in newer regions, 50-60% in core strong regions
  • No plans for international expansion or new formats until 2,500 store target achieved

Same Store Sales Growth: Guidance of 8-10% SSSG going forward

Q&A Session Highlights

Store Performance Metrics:

  • Old stores: ₹1,124 per square feet for full year
  • New stores: ₹750 per square feet for full year
  • New stores start at 70% of mature store throughput

Geographic Performance: Strong performance in Gujarat, South states (Andhra, Karnataka, Goa), and Maharashtra

Inventory Situation: Additional inventory of ₹300 crores comprising: ₹125-150 crores for 60 stores planned for Q1 FY27 opening, and ₹100-150 crores pre-GRC (goods receipt) due to supply chain disruptions and early sourcing

Team Structure: Management emphasized that 6 people could represent the company on earnings calls, with senior team members having 10+ years tenure

Recent Trading Performance: Management noted April was very good, May saw some slowdown due to geopolitical situation, June expected to be strong