V2 Retail Concall Summary: Key Highlights and Q3 FY26 Results

Guidance & Outlook

• FY27 Growth Target: Management reiterated FY27 guidance of 8%–10% SSSG, 50%+ revenue growth, and around 150 new store additions.
• Q4 Demand Tone: Management said Q4 has started with similar footfalls and demand trends as Q3, with support expected from the wedding season and broader consumption recovery.
• Gross Margin Philosophy: Management reiterated that gross margin is deliberately capped around 28%–29% over time, with most sourcing benefits passed on to consumers to sustain value-led growth.
• Margin Expansion Drivers: Future EBITDA improvement is expected to come mainly from operating leverage, lower cost of retailing, and higher sales per sq ft, rather than gross margin expansion.
• Store Addition Plan: For Q4 FY26, management expects to open 30–35 stores, with 10 already added and around 20 more planned.
• Competitive View: Management said organized competition is now a structural reality and no longer an external variable, but sees its value-led model and store economics as sustainable despite intensifying competition.
• Omnichannel Outlook: The company plans to launch omnichannel in a limited-radius fulfillment model and expects it could contribute around 5% of sales at maturity.

Capex & New Projects

• Store Rollout: The company added 105 net new stores in 9M FY26, including 35 stores in Q3, taking the network to 294 stores and 31.9 lakh sq ft at quarter-end; store count had already reached 304 by the time of the call.
• Store Economics: A typical new store is 10,000–11,000 sq ft, with capex of about ₹1.1cr and initial inventory of ₹1.3–1.4cr, implying total upfront investment of ₹2.4–2.5cr.
• Geographic Expansion: Management entered around 7 new states in FY26 and said future additions will be split roughly 60%–70% in existing clusters and 30%–40% in new geographies.
• Site Selection Shift: The company has moved away from opening stores in the middle of crowded markets and is prioritizing parking, frontage, and floor plate quality, even if stores are 1–2 km away from the main market.
• Manufacturing / Logistics Cleanup: The reduction in employee cost per sq ft was partly helped by discontinuation of manufacturing in subsidiaries, sharpening the model around retail scale and centralized operations.
• Stock Split: Management said the stock split resolution has been passed and implementation is expected very soon to improve accessibility for investors.

Financial Performance

• Q3 Revenue: Revenue under IndAS rose to ₹929cr, up 57% YoY, which management said significantly outpaced the broader market.
• Q3 EBITDA: EBITDA under IndAS increased to ₹174cr from ₹112cr, up 56% YoY, with EBITDA margin at 18.7%.
• Q3 PAT: PAT under IndAS rose to ₹102cr from ₹51cr, up 99% YoY, and management highlighted that this exceeds the company’s full-year FY25 PAT.
• 9M Revenue / EBITDA: For 9M FY26, revenue reached ₹2,270cr, up 64% YoY, while EBITDA rose to ₹346cr from ₹200cr, up 73% YoY, with margin improving to 15.3% from 14.4%.
• 9M PAT: 9M PAT increased to ₹144cr from ₹66cr, up 119% YoY.
• Pre-IndAS Profitability: On a pre-IndAS basis, Q3 EBITDA was ₹126cr with 13.5% margin, while 9M EBITDA was ₹223cr with 9.8% margin; management said this better reflects the true economics of retail.
• Returns: ROE improved to 24.5%, versus 23.2% in FY25 and 10.7% in FY24, driven by disciplined capital allocation and operating leverage.

Operational Highlights

• Volume-led Growth: Q3 volume growth was 48% YoY, with management emphasizing that sales growth is being driven by scale-up and volume rather than discounting.
• Full-price Mix: Around 92% of sales were at full price in Q3, indicating reduced dependence on discounting.
• SSSG: Reported Q3 SSSG was 2%, but management said normalized SSSG adjusting for the Durga Puja shift was 12.8%; 9M SSSG stood at ~8.6%.
• Store Productivity: Mature stores delivered around ₹1,200 per sq ft per month, while FY25/FY26 cohorts averaged ₹730–740 per sq ft per month, reflecting expected maturation over 2–3 years.
• Blended PSF: Management aims to maintain a company-wide blended productivity of around ₹1,000 per sq ft even while growing store area by roughly 50% annually.
• Customer Retention: In stores older than two years, repeat customers now contribute about 68% of revenue, up from 56%, while purchase frequency improved from 5–5.5 months to 4–4.25 months.
• ABV / Seasonal Mix: Q3 ABV was ₹964, helped by winterwear, which management described as a high-ASP, high-margin category with strong seasonal demand.

Business & Strategy Updates

• Accounting Cleanup: Management reassessed lease tenures under IndAS 116, aligning with peer practice; this led to a one-time exceptional gain of ₹27.69cr and reduced the gap between pre-IndAS and post-IndAS reporting going forward.
• PPE Write-off: The company wrote off ₹5.06cr of fixed assets after physical verification and reconciliation, which management said resolves the earlier audit qualification.
• Working Capital Strategy: The company used part of the ~₹400cr QIP proceeds to prepay vendors by about ₹300cr, aiming to become the preferred paymaster in the industry and improve sourcing terms.
• Vendor Economics: Management said vendor bill discounting economics of roughly 1.5% per month effectively support gross margin and strategic sourcing relationships.
• Cost of Retailing: Company-wide retailing cost was around ₹190–195 per sq ft in Q3, with management targeting a reduction toward ₹180 near term and head office cost dilution over time.
• Online / Quick Commerce Stance: Management sees pure-play online apparel models as structurally disadvantaged at low ASPs and believes quick commerce remains immaterial for apparel, especially in Tier-II and Tier-III markets.
• Core Operating Thesis: Management’s central message remains that growth is being driven by store rollout, volume growth, strong full-price sell-through, and improving cost leverage, with new stores claimed to be EBITDA-positive from month one and then maturing over 2–3 years.