Summary
Vishal Mega Mart Limited - Q3 FY26 Earnings Call Summary Wednesday, January 28, 2026 4:00 PM
Event Participants
Executives 2 Amit Gupta (CFO), Gunender Kapur (MD & CEO)
Analysts 8 Devanshu Bansal, Gaurav Jogani, Garima Mishra, Jignesh Kamani, Latika Chopra, Manish Poddar, Manoj Menon, Nihal Mahesh Jham, Percy
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹3,670 crores | +17% YoY; growth impacted by Durga Puja shifting to Q2 this year vs Q3 last year. |
| Adjusted SSG | 9.6% | Adjusted for 2.1% festive timing impact; driven 70% by transactions and 30% by bill value. |
| EBITDA | ₹605 crores | +19.8% YoY; growth supported by operating leverage and cost management. |
| EBITDA Margin | 16.5% | +40 bps YoY; improved from 16.1% in the prior year period. |
| PAT | ₹313 crores | +19.1% YoY; margins stood at 8.5% vs 8.4% YoY. |
| 9M FY26 Revenue | ₹9,792 crores | +19.9% YoY; represents a normalized view neutralizing all festive seasonality. |
| 9M Adjusted SSG | 10.3% | Consistent with long-term average; fashion segments saw 14% growth in high price points. |
| Own Brand Contribution | 74.5% | +100 bps YoY increase in private label share for the 9-month period. |
| Store Count | 771 stores | Added 29 new stores in Q3; presence expanded to 517 cities. |
| Trading Area | 13.2 million sq. ft. | Managed across various formats including new small-format pilots. |
Geographic & Segment Commentary
- South India: Acted as a primary growth driver with 12 of 29 new Q3 stores opened in Kerala, Andhra Pradesh, Karnataka, and Telangana. Kerala specifically is seeing outsized performance with 19 stores operational and a pipeline of 20 more.
- Small Format Stores: Pilot expanded to 10 stores (4 added in Q3) focusing on smaller towns with a smaller footprint (13k-14k sq. ft.). Management noted revenue per sq. ft. and financial outcomes are similar to large formats, though merchandise mix leans toward lower price points.
- Fashion Segment: Premium price points outperformed with 14% SSG, while mid and opening price points grew at 9% and 6% respectively. The “Aspirations Affordable” strategy is driving premiumization even in a value-conscious market.
Company-Specific & Strategic Commentary
- Quick Commerce: Expanded to 723 stores across 485 cities with 12 million registered users. Management is scaling this systematically as a sustainable channel rather than pursuing irrational growth.
- Store Optimization & Right-Sizing: Completed right-sizing of oversized stores in Karnataka (reducing from ~25k to ~17k sq. ft.) to improve revenue density. Periodic refurbishment occurs every 7-9 years to maintain aspirational store standards.
- Marketing & Branding: Launched a winter/festive campaign with actress Manushi Chhillar to dramatize the “do good, look good” value proposition. The campaign successfully targeted mass-market consumers looking for aspirational fashion at affordable price points.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| New Store Openings | 80 - 100 stores (FY26) | Expect to end at the upper end or slightly above 100 stores for the full year. |
| SSG Target | Double-digit (10%+) | Long-term endeavor driven by market share gains from mom-and-pop stores. |
| EBITDA / PAT Growth | ~25-30% YoY | Management expects to maintain 9M growth trajectories (24.4% EBITDA / 30% PAT) through FY26. |
Risks & Constraints
| Risk | Context |
|---|---|
| Seasonality & Weather | Delayed winter in December impacted high-margin seasonal merchandise sales, though January recovery was noted. |
| Regional Disruptions | External events like the state-wide shutdown in Assam during Durga Puja peak days can materially impact localized quarterly results. |
| Real Estate Availability | While execution capacity has increased, the ability to hit store targets is constrained by finding profitable, high-potential properties. |
Q&A Highlights
Festive Timing Impact
- Question: How much of the growth deceleration from 22.5% to 17% was due to festive timing? (Percy)
- Answer: Almost entirely due to Durga Puja shifting to Q2. Adjusted 9M SSG of 10.3% is the “real” number for the business (Gunender Kapur).
Premiumization Trends
- Question: Is the faster growth in higher price points a market trend or company intervention? (Manish Poddar)
- Answer: It is a deliberate company intervention. Management invests buying savings into quality/fashion upgrades to move customers from opening to mid and premium price points (Gunender Kapur).
Small Format Strategy
- Question: Are you ready to scale the small format pilot beyond 10 stores? (Jignesh Kamani)
- Answer: Results are encouraging with similar financial outcomes to large stores. The next phase is to reach 30-40 stores for robust validation before a massive rollout (Gunender Kapur).
Labor Code Impact
- Question: What is the financial impact of the new Labor Codes? (Garima Mishra)
- Answer: Impact was ~₹8.4 crores over 9 months, primarily from gratuity adjustments for managerial staff. Most store employees were already in the required bracket (Amit Gupta).
Key Takeaway
Vishal Mega Mart delivered a resilient 17% revenue growth in Q3 FY26, despite a significant festive timing headwind that shifted Durga Puja sales to the previous quarter. On a normalized 9-month basis, revenue grew 19.9% and adjusted SSG remained robust at 10.3%, significantly outperforming the broader retail sector. The company’s strategic focus on “affordable aspirations” is yielding results, with high-end fashion price points growing at 14% and private labels now contributing 74.5% of sales. Management has successfully expanded its footprint to 771 stores and 485 quick-commerce cities, while maintaining stable EBITDA margins of 16.5%. With store addition guidance likely to exceed 100 for the year and successful pilots in Kerala and small-town formats, the company is well-positioned to capture market share from unorganized retail. Vishal Mega Mart remains optimistic that recent direct tax reforms and GST rationalization will further bolster mass-market consumption in the coming quarters.
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