V2 Retail Ltd (V2RETAIL) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to V2 Retail Limited Q2 and H1 FY '27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Before we begin, a brief disclaimer. The presentation which V2 Retail Limited has uploaded on the stock exchange and their website, including the discussions during today's call, contains or may contain certain forward-looking statements concerning V2 Retail Limited business prospects and profitability, which are subject to several risks and uncertainties. And the actual results could materially differ from those in such forward-looking statements. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note
Moderator: This conference is being recorded. I now hand the conference over to Mr. Akash Agarwal, Director and CEO, V2 Retail. Thank you and over to you, sir.
Akash Agarwal (V2 Retail Ltd): Good afternoon, ladies and gentlemen. I, Akash Agarwal, welcome you all to our Q2 and H1 FY '27 earnings conference call. Thank you for your continued trust in V2 Retail, India's leading value fashion retailer for Bharat. V2 was founded with a simple mission to democratize fashion by offering high quality, trendy apparel at affordable prices to value-conscious customers. Today, we proudly serve India's growing neo-middle-class and middle-class populations across Tier 2 and Tier 3 cities. As of 30th September 2026, we operate 427 stores across 27 states in more than 340 cities, covering about 4.6 million square feet of retail space. We have a complete value chain, from an in-house design team of 60 designers to dedicated job workers, to 3 warehouses, 22 hubs, to our own fleet that refills inventory at stores every alternate day. Our motto, value and variety, comes to life through this. This was a quarter of aggressive expansion with short-term pain for long-term gain. In Q2 FY '27, we opened 49 new stores and closed 3, taking the total to 427 stores. In the first half of FY '27, we opened 106 stores and closed 4. This is our highest-ever H1 addition. 60% of these new stores are in core states: UP, Bihar, MP, Odisha and Assam, where our brand recall is very strong. Second, volume-led growth. Despite muted consumer sentiment, we delivered strong volume growth. In the second quarter, volume growth was 31% year-on-year. In the first half of FY '27, volume growth was 43% up year-on-year. This shows our value proposition is working. Customers are buying more from us. Three, same-store sales growth. The FY '27 SSG showed minus 14.9%, but normal SSG was plus 0.5%, because Q2 last year had an early Durga Puja and an extended wedding season, while this year, the festive season shifted to quarter 3. If we adjust for this, we are 0.5% positive. The first half SSG was minus 3.7% calendar basis. Our sales per square feet per month was INR 700 in the second quarter versus INR 933 in the second quarter of FY '26, and INR 785 in the first half of FY '27 versus INR 948 in the first half of FY '26. This drop is expected because we have opened 106 stores in 6 months. New stores take up to 2 to 3 years to mature and also because of the shift of the festive season. Our mature stores, which are older than 2 years, are still doing INR 1,000-plus PSF. Four, customer metrics remain strong. Our average bill value was INR 917 in the first half of FY '27 compared to INR 900 last year. Our average selling price was around INR 307 in the first half of the year versus INR 309 in the first half of the last year. Full-price sales was 91% in quarter 2 and H1 versus 92% last year. We are not a discount retailer, we sell at MRP. Revenue mix remained primarily the same: menswear about 40%, ladies 29%, kids 22% and lifestyle 9%. Now I will take you through our consolidated financial performance. Revenue from operations was INR 905.6 crores in the second quarter versus INR 708.6 crores in the second quarter last year, registering a growth of 28%. This growth is entirely volume-led. Gross profit was INR 281.3 crores versus INR 198.2 crores, a growth of 42%. Gross margin improved to 31.1% versus 28.0% last year, an expansion of 310 basis points. EBITDA with Ind AS was INR 120.3 crores versus INR 85.4 crores, a growth of 41%. EBITDA margin stood at 13.3% versus 12.1%. EBITDA pre-Ind AS, our real cash EBITDA, was INR 53.4 crores versus INR 44.4 crores last year, growth of 20%, with a margin of 5.9%.
Akash Agarwal (V2 Retail Ltd): was 18.2 crores versus 17.2 crores, a growth of 6%. The PAT margin was 2%. PAT growth is lower than EBITDA because of higher depreciation, 68 crores of depreciation versus 37 crores of depreciation last year, from right-of-use assets for the 106 new stores. Now, consolidated financials for the first half of the year, revenue stood at 1902.8 crores versus 1340.9 crores, a growth of 42%. Gross profit grew from 384.4 crores to 566.4 crores with a 29.8% margin. EBITDA grew from 172.7 crores to 259.7 crores, a growth of 50%. Pre-Ind AS EBITDA grew from 96.9 crores to 132.8 crores with a growth of 37%, and the PAT grew from 41.9 crores to 60.1 crores with a growth of 43%. As of September 30th, 2026, inventory stands at 1447.8 crores versus 1141 crores at the end of March 2026. The increase of about 306 crores of inventory is for the 106 new stores, advanced festive stocking for quarter 3, and the new store pipeline for quarter 3. Our festive inventory is already at stores. Borrowings stood at 528 crores, of which 45.6 crores is non-current and 483 crores is current, versus 253 crores in March 2026. The increase is to fund growth. The net working capital increased to 88 days versus 81 days in FY '26 due to higher inventory. This will normalize in quarter 3 after the festive sale. Long-term track record: so, from FY '22 to FY '26, our revenue grew from 629 crores to 3,067 crores, almost 5 times. EBITDA grew from 65 crores to 455 crores, and PAT from a loss to 100 162 crores at the end of FY '25. We have demonstrated a profitable scale up. So, friends, we are at an at an inflection point. Why did we open 106 stores in the first half of the year? We have reached a stage where our back-end, which is the design, sourcing, warehousing, and talent, can support 150+ stores per year. The demand for value fashion in Bharat is huge. The market is shifting from unorganized to organized. We want to capture this first. It has put short-term pres- pressure on SSG and PSF, but history shows that our new stores break even in the first month and achieve company average sales within 2 to 3 years. Quarter 3 will be our biggest quarter ever. Durga Puja, Dussehra, Diwali, the wedding season, all fall in quarter 3 this year. Our inventory is ready. We expect a strong recovery in SSG and PSF. We plan to open only 60 to 70 stores in the second half of the year, focus on consolidating operations, and sweating our existing 427 stores. With gross margin now at 30%, we aim to sustain around 29 to 30% gross margin and 13.5 to 14.5% EBITDA margin for the full year. As festive inventory sells, net working capital should come back to around 75 to 80 days by March 2027. We remain committed to our mission to provide affordable, high-quality fashion to every Indian. With this, I open the floor to questions and answers.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press "*" and "1" on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vaibhav from Haitong India Securities. Please go ahead.
Vaibhav (Haitong India Securities): Hi, thanks for the opportunity. Akash sir, my question was on our LFL growth for Q2. We have posted a negative growth because of the shift of festive season. I wanted to get more color on this number in terms of break-up in our four festive-related states and other states where there is a lesser dependency on festivals.
Vaibhav (Haitong India Securities): break-up of this number, like how other states have performed where there is a lesser dependency on this festival?
Akash Agarwal (V2 Retail Ltd): So, I won't have that number on hand, but I can tell you that almost 260 of our stores are Puja impact stores, where there's an impact of Durga Puja. And it ranges from about 30 days before the festival to about 15 days before the festival. And that is why we always give a normalized SSSG whenever there's a festival shift.
Vaibhav (Haitong India Securities): Understood. And related to this, how would be our performance in Q3? Can you give some more color? How has October faired so far, and how are the initial traction has been in November as well? And what kind of SSSG do you expect to post in Q3? And you also have cut your guidance to 5% to 7% same-store sales growth after the Q2 business update. Do you foresee now with the Q3 demand to surpass this guidance in FY '24?
Akash Agarwal (V2 Retail Ltd): So, you need to understand that already 6 months of the year had passed, and in the first 6 months, our SSSG calendar basis was minus 3.7%. So, even if we achieve the target that we had set initially of 8% to 10% for the rest of the year, then the whole year SSSG would be 5% to 7%. So, there was no change in guidance per se. It was just because the first 6 months of the year was a bit muted. That is why the whole year guidance changed. But looking at October, so if you look at calendar to calendar, then of course it's a double-digit SSSG growth, but if you look at period to period, it is again a flat SSSG growth. But quarter three winter is a big, big part of quarter three. So, and Diwali is also still pending. So, I think we'll be able to comment more and give more color by the end of November or around 15th December. It all depends on how the winter goes.
Vaibhav (Haitong India Securities): But how has been the Puja sales in October?
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