V2RETAIL - V2 Retail Limited Share Price

V2 Retail Limited's management provided a positive outlook for FY26, projecting a revenue growth of 45% to 50%, driven by new store openings and a same-store sales growth (SSSG) of 8% to 10%. They achieved record revenues of INR 1,884.5 crores in FY25, marking a 62% increase year-over-year, coupled with a profit after tax of INR 72 crores, an impressive growth of 159%.

Key highlights from management include the following forward-looking points:

1. Store Expansion: The company plans to open 100 new stores in FY26, having already opened 17 in the first quarter. As of now, they maintain over 207 stores. The management emphasized that all new stores have been profitable from the first month of operations.

2. Margins: The EBITDA margins are expected to be in the range of 8% to 9%, maintaining a pre-IndAS EBITDA margin of 8%. This supports the forecast of a PAT margin of 4% to 5% going forward.

3. Product Strategy: Continuing its focus on private labels, the company aims for private label sales to constitute 60% by mid-2026 and 80% by 2027, enhancing margins and reducing inventory aging from 18% to just 5% for over one-year-old inventory.

4. Sales Performance: In FY25, same-store sales growth was about 29% and full-price sales rose to 89%, indicating strong market traction. Management sees new stores averaging INR 750-800 per square foot, improving steadily towards the performance of mature stores.

5. Cost Efficiency: CAPEX per store stands at INR 2.2 crores, inclusive of inventory, reflecting a lean approach as creditors are held at 45 days with inventory turnover projected to reduce to around 75-80 days as operational efficiency improves.

6. Market Expansion: The company is expanding into new regions, including Punjab and Rajasthan, indicating a strategy to penetrate markets with strong response rates.

Management expresses confidence in sustaining this growth trajectory while balancing the need for profitability alongside aggressive expansion strategies.

Q&A Section Summary from V2 Retail Limited Q4 & FY25 Earnings Call:

1. Question: "Can we be PAT positive this year in all quarters?" Answer: Yes, that's the target. We were EBITDA positive in all quarters this year and expect to maintain PAT positivity for all four quarters in the coming years.

2. Question: "Do we have a PAT margin number in mind that we want to achieve?" Answer: We target a pre-IndAS EBITDA margin of 8% to 9%, which translates to around 4% to 5% for PAT.

3. Question: "Is the plan to open 100 stores this year still in force?" Answer: Yes, we've opened 17 stores this quarter and are on track to open all 100 stores this year.

4. Question: "How do you expect inventory levels to behave amidst new store openings?" Answer: As our sales per square feet increase, we expect to reduce inventory days further due to increased efficiency.

5. Question: "What is the current warehouse capacity and any expansion plans?" Answer: Currently, our warehouse can service another 70-80 stores. We have plans to finalize additional warehouses as needed.

6. Question: "What EBITDA growth do you expect when growing at 40%-50%?" Answer: New stores have lower per square feet sales initially, so we anticipate modest EBITDA margin expansion alongside our growth targets.

7. Question: "Will you consider franchising in the future?" Answer: We haven't explored franchising yet, but we would consider it if we want to accelerate store openings and business momentum.

8. Question: "What is your guidance for PAT in FY26?" Answer: While it's too early for specifics, we are optimistic and aiming for significant profit growth continuing our current trends.

9. Question: "What is the reason for the recent reduction in rental costs?" Answer: We focus on larger footprints and have been able to negotiate lower rental prices by avoiding central locations in favor of better customer experience.

10. Question: "How do you view the performance of new stores?" Answer: New stores have improved significantly, achieving around 26% lower revenue than mature stores, indicating our operational strategies are effective.

Each answer effectively communicates V2 Retail's strategic direction, operational efficiency, and optimistic projections for future growth while retaining fiscal discipline.