V-Mart Retail Limited Q3 FY26 Earnings Call Summary

Summary

V-Mart Retail Limited - Q3 FY26 Earnings Call Summary Friday, January 23, 2026 11:00 AM

Event Participants

Executives 2 Anand Agarwal (CFO), Lalit Agarwal (MD)

Analysts 5 Anchal (Nuvama Wealth Management), Devanshu Bansal (Emkay Global Financial Services), Hitaindra Pradhan (Maximal Capital), Kaivalya Baing (IIFL Capital), Sucrit Patil (Eyesight Fintrade)

Financials & KPIs

Geographic & Segment Commentary

• V-Mart (Core): Performance was steady despite a delayed winter in North and West India, with peak winter demand only picking up after December 20th. The segment benefited from a strong marriage calendar and improved rural sentiment driven by higher MSPs and good monsoons.
• Unlimited (South): Reported healthy volume growth of 10% for the 9-month period, outperforming the core brand. New stores in this segment are delivering throughput at par with V-Mart, while legacy stores remain profitable but have lower sales per square foot due to larger sizes.
• LimeRoad: Strategic focus remains on profitability over scale, with the segment remaining profitable at the CM3 level for 1.5 years. Marketing spends were sharply curtailed, and the platform is now primarily used for omnichannel enablement (100% prepaid orders).

Company-Specific & Strategic Commentary

• Inventory Management: Achieved high freshness of inventory by liquidating old stock in previous quarters, leading to lower provisioning. Management avoided aggressive markdowns despite mid-quarter volatility to protect margins.
• Cost Efficiency: Total expenses (excluding exceptional items) increased only 1% YoY despite a 9% revenue growth, showcasing strong operating leverage. Personnel and marketing costs were optimized through digital interventions.
• Omnichannel Integration: Leveraging technology for store fulfillment and “endless aisle” capabilities. Google ratings and NPS scores are at all-time highs, supporting organic footfall growth.
• Labor Code Provision: Recognized a one-time exceptional cost of ₹2.1 crores as a conservative measure following proposed changes in labor regulations.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

SSSG Trajectory

• Question: Why has SSSG been flattish or below nominal GDP growth in recently matured stores? (Hitaindra Pradhan)
• Answer: Performance is impacted by the shift of the lunar calendar (Pujo moving to Q2). Adjusted for this, revenue growth is ~15%. Management expects a normalized 5-6% SSSG as rural incomes rise and fashion demand increases. (Lalit Agarwal)

Unlimited Segment Profitability

• Question: Can Unlimited deliver V-Mart level EBITDA margins given structurally higher rentals? (Devanshu Bansal)
• Answer: Monthly rentals are ₹65/sq. ft. for Unlimited vs ₹49 for V-Mart. However, higher throughput in new stores and better product mix are expected to bring profitability in line with V-Mart within 2-3 years. (Anand Agarwal)

Margin Levers

• Question: Are margin gains sustainable, or do they rely on one-time cost cuts? (Kaivalya Baing/Rajeev Anchal)
• Answer: Gains are driven by 70 bps expansion in offline gross margins (less discounting) and operating leverage. While most “low-hanging” cost cuts are done, future gains will come from sales leverage over a fixed rental/manpower base. (Anand Agarwal/Lalit Agarwal)

Key Takeaway

V-Mart delivered a robust Q3 FY26 with a 23% YoY increase in PAT to ₹88 crores, characterized by disciplined margin protection despite a challenging weather backdrop and a festive timing shift. Revenue grew 9% to ₹879.8 crores, while offline gross margins expanded 70 bps due to superior inventory health and reduced discounting. Strategically, the company is successfully pivoting the Unlimited segment, which saw 10% volume growth, and has stabilized LimeRoad as a profitable omnichannel tool. Management remains committed to a cluster-based expansion, targeting 13-14% annual area growth and 5-8% SSSG. While weather-related disruptions in the North and high competition remain watch points, the company’s debt-free balance sheet and focus on “profitable growth over headline numbers” position it well to capture the ongoing shift from unorganized to organized retail in Tier 2 and Tier 3 cities.