Summary
V2 Retail Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 04, 2026 12:00 PM
Event Participants
Executives 1 Akash Agarwal (Director and CEO)
Analysts 10 Abhishek Sengupta, Ankit Babel, Ankush Agrawal, Anupama, Arvind Arora, Aryan Singh, Deepak Pruthy, Harshita Jain, Palash Kawale, Rehan Saiyyed, Samarth Nagpal, Shreyans Jain, Vidhi Shah, Videesha Sheth
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹929 crores | +57% YoY; driven by strong volume growth of 48% and expansion. |
| Store Count | 294 stores | +105 net additions in 9M FY26; retail space reached 31.9 lakh sq. ft. |
| SSSG (Normalized) | 12.8% | Adjusted for Durga Puja shift; Reported SSSG was 2%. |
| Sales per Sq. Ft. (PSF) | ₹1,000 | Blended 9M average; Mature stores (pre-Mar’24) at ₹1,200 vs New at ₹730. |
| EBITDA (IndAS) | ₹174 crores | +56% YoY; Margin at 18.7%. |
| EBITDA (Pre-IndAS) | ₹126 crores | +50% YoY; Margin at 13.5%. Management prefers this for operational tracking. |
| PAT (IndAS) | ₹102 crores | +99% YoY; includes exceptional gain of ₹27.69 crores from lease reassessment. |
| Gross Margin | 32.4% | +40 bps YoY; benefited from vendor bill discounting (1.5% per month). |
| Inventory | ~₹900 crores | Stock turnover days stable; includes inventory for upcoming Q4 store openings. |
| ROE | 24.5% | Improved from 23.2% in FY25, reflecting strong operating leverage. |
Geographic & Segment Commentary
- Expansion Strategy: Focused on Tier-II and Tier-III cities with a “hub-and-spoke” model. During 9M FY26, the company entered 7 new states, with Karnataka and West Bengal showing significant traction. 60-70% of new stores are placed in existing clusters, while 30-40% target new geographies.
- Category Mix: Men’s wear remains the largest segment at 41% of revenue. Women’s wear is the fastest-growing category, led by high demand in the Kurti department. Kids’ wear contributes approximately 24-28% of the mix.
- Operational Density: Older stores (mature) achieved ₹1,200 PSF per month, while newer cohorts from FY25 and FY26 are performing at ₹730-₹740 PSF, contributing to EBITDA from the first month of operations.
Company-Specific & Strategic Commentary
- Lease Accounting Realignment: Reassessed lease terms to align with industry peers (Trent, V-Mart), linking lease duration to store performance. This reduced lease liabilities by ₹499 crores and resulted in a one-time exceptional gain of ₹27.69 crores.
- Capital Allocation (QIP): Successfully raised ₹400 crores through a QIP. Approximately ₹300 crores were used to prepay vendors for bill discounting (earning 1.5% per month), while the remainder funds the aggressive rollout of 150 stores per year.
- Operational Efficiency: Targeted a reduction in head office costs from ₹27 PSF to ₹15-16 PSF through scale. Total cost of retailing (blended) is targeted to reach ₹180 PSF in the near future.
- Omnichannel Strategy: Planning an omnichannel launch using stores as dark warehouses for local delivery. Management expects this to contribute 5% of sales eventually with minimal CAPEX.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Store Openings | 150 stores in FY2027 | Expanding geographic footprint while maintaining cluster strength. |
| SSSG | 8% to 10% for FY2027 | Assumes 12% growth for newer cohorts and 5-6% for mature stores. |
| Revenue Growth | ~50% YoY | Driven by aggressive store additions (30-35 planned for Q4 FY26). |
| Sales PSF | ₹1,000 (Blended) | Target to maintain this level despite high share of non-mature stores. |
| Gross Margin | 28% to 29% | Long-term target as management prioritizes passing value to consumers. |
Risks & Constraints
| Risk | Context |
|---|---|
| Competition | Intensified competition from organized peers; V2 mitigates this by focusing on superior PSF (30% higher than peers) and better store frontage/parking. |
| Talent Attrition | High floor-level staff attrition at minimum wage; management uses retention bonuses for head office leadership to maintain stability. |
| Working Capital | Temporary increase in working capital days (69 days) due to voluntary vendor prepayments; expected to normalize to 60 days as CAPEX increases. |
Q&A Highlights
Lease Accounting & Audit
- Question: What changes were made to lease accounting and why? (Ankit Babel)
- Answer: Aligned with peers like Trent and V-Mart by reassessing lease tenures based on yearly performance reviews rather than 9-12 year contracts. This resolved earlier audit qualifications and reduced the gap between Pre-IndAS and Post-IndAS reporting (Akash Agarwal).
Vendor Payments & Cash Usage
- Question: Why did payable days decrease sharply? (Ankit Babel)
- Answer: The company utilized ₹300 crores of QIP proceeds to prepay vendors for a 1.5% monthly discount. As funds are deployed for new stores, payables will return to the 55-60 day range (Akash Agarwal).
Competition & Online Threat
- Question: Is there a threat from low-cost online players like Meesho? (Abhishek Sengupta)
- Answer: Pure online players face 50-60% costs (logistics/acquisition) on low-value items. V2’s retailing cost is ~18-19%, allowing for better value delivery. Apparel remains an experiential purchase in Tier-II/III towns (Akash Agarwal).
Store Economics
- Question: What is the investment and cost structure for a new store? (Deepak Pruthy)
- Answer: Total investment is ₹2.5 crores (₹1.1cr CAPEX, ₹1.4cr inventory). Operating cost is ~₹140 PSF (Rent ₹50, Emp ₹40, Power ₹20-25). Stores are EBITDA positive from month one (Akash Agarwal).
Key Takeaway
V2 Retail delivered a robust Q3 FY26 with 57% revenue growth and a 99% surge in PAT, surpassing its full-year FY25 performance in just nine months. The company is successfully executing an aggressive expansion strategy, adding 105 stores in 9M FY26 while maintaining a strong ROE of 24.5%. Strategic utilization of QIP funds for vendor discounting has temporarily boosted gross margins to 32.4%, though management maintains a long-term target of 28-29% to preserve its value proposition. With mature stores reaching ₹1,200 PSF and new stores turning EBITDA positive immediately, the company appears well-positioned to achieve its FY27 target of adding 150 stores and maintaining 8-10% SSSG. Investors should monitor the normalization of working capital and the planned transition to a professional CEO as the company scales toward 500+ stores.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: