V-Mart Retail Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Demand resilient but uneven: Consumption in Tier 2/3 towns stayed healthy while urban India turned cautious late in the quarter on geopolitical fears; footfalls grew and the summer launch was pulled forward successfully.
• Gross margin dipped 1% YoY on inventory provisioning and a smaller high-margin LimeRoad commission stream, but inventory health improved with 3 fewer days of inventory and 13% lower per-store stock.
• South market (Unlimited) is the standout: 28% revenue growth and 63% EBITDA jump, with new stores delivering above network throughput and reinforcing the Tier 2/3 expansion thesis.
• Raw material inflation is being managed, not passed on: Yarn prices rose 10–15%, translating to ~5–7% in apparel costs; management is blocking orders early, absorbing 1–2% where needed, and passing on only selectively to avoid the mistakes of FY22–23.
• What to watch next quarter: Whether the 6–7% like-for-like growth needed to drive ~120 bps of margin expansion materialises, how crude-driven input cost rises hitting June–August deliveries play out, and the Adhik Maas demand lull.

Demand & Consumer Environment

• Urban caution, small-town resilience: Controlled inflation and better per capita income supported consumption broadly, but war-related perception pressure late in the quarter made urban consumers hold back spending; Tier 2 and Tier 3 towns continued to look good.
• Weather whiplash: A very weak winter was followed by a sudden chill and then an early summer; the organisation launched summer in advance and captured benefits versus the market, though March rains briefly disturbed seasonal need before it picked up in April and May.
• Festival performance mixed: Eid was very good, Holi was okay but not great; post-Holi and post-Eid saw a good jump driven by the early product line launch, and the marriage season brought additional footfall.
• Agricultural backdrop: Good agricultural output provided a tailwind, though some rains created havoc in certain farm areas, largely in the Northern belt.
• ASP flat despite more feet: The flat average selling price is not a down-trading signal; consumers want more efficiency and value, and a mix shift is underway where higher-end brand buyers may move down to V-Mart while entry-level customers may struggle, keeping ASP in balancing mode.

Lalit Agarwal: "So the consumer may find it difficult to manage their inflation and that could be a reality. And that is what we are caring about, that all of our consumers who are largely need-based consumers whose their income, but one respite we are able to see is the increase in minimum wages or the overall earning capabilities that is going to increase by the government."

Margin Walk & Profitability

• Gross margin down 1% YoY: The decline came from a provision on inventory per consistent policy and a 12% drop in LimeRoad commission income, which flows 100% into the gross margin line and now represents a smaller share of overall revenue.
• EBITDA growth levers: Total expenses rose only 8%, helped by a planned drop in LimeRoad expenses, lower ESOP costs, and reduced offline marketing as the company shifts to loyalty-driven digital traffic. Sustained operational efficiencies supported the expansion.
• Inventory health improving: Days of inventory improved by 3 days and per-store inventory fell 13% YoY; further rationalisation of assortments, display densities, and supply chain efficiencies on replenishment cycles should sustain the betterment.
• The 120 bps margin bridge: Management believes that if 6–7% like-for-like growth is achieved, similar margin expansion could be derived, but flagged constraints: overall inflation, rising labour costs from recent Haryana/Noida developments, and the fact that "all things currently do not look equal."
• Margin strategy is internal, not mix-driven: Management explicitly stated they never work toward premiumising the product mix to protect margins; gains will come from internal efficiency, vendor innovation, and cost savings from increased production quantum.

Lalit Agarwal: "I see there are constraints in terms of the overall inflation, overall labour cost also going up because what happened recently in Haryana, or Noida and all of this certainly has led to a little bit of -- could lead to a little bit rise in the labour cost that again could be detrimental. But otherwise, I don't see any challenge whatever that you are thinking, whatever you are projecting. We also believe that similar things could be derived if we are able to achieve 6% to 7% of like-for-like growth."

Inflation, Pricing & Supply Chain

• Raw material pressure is real: Polyester yarn prices rose 10–15%, converting to a ~5–7% increase in apparel prices; crude oil price rises indirectly affect raw materials, products, and services, with deliveries arriving in June–August set to reflect the impact.
• Mitigation playbook: The team has blocked orders well in advance using existing inventories of yarn, fabric, and apparel held by vendors; they are negotiating to nullify the impact, absorbing 1–2% cost on certain products, and passing on price increases only in a very controlled way where the design factor is larger and the consumer can pay.
• Supply chain under strain: Gas issues have impacted production lines at certain vendors, and elections in Bengal and Tamil Nadu reduced the labour workforce; availability of labour is a challenge, and management is dealing with it as an emergency, including exploring imports from China.
• Advance booking de-risks H1 FY27: The team has already blocked 50–60% of total demand through December; no jump in margin is expected from this, but also no negation, with the focus squarely on availability and better value for consumers.

Lalit Agarwal: "We do not want to pass it on blindly. We do not want to pass it on like we did it in ’22, ’23. So we don’t want to do that same mistakes again."

Store Expansion & Competitive Landscape

• Area addition guidance maintained: The company reiterated 13–15% area addition every year, net of 1–2% closures from mistakes; gross store additions in the period were 90, not the 75–78 some analysts had modelled.
• New store productivity strong: New stores are delivering better than network throughput, reinforcing confidence in site selection discipline and brand relevance across Tier 2 and Tier 3 markets.
• Competition opening stores, but impact is fading: One or two additional competitor stores no longer give a big impact on existing store sales; management is able to counter competition and is also benefiting from improper execution and presentation by earlier successful retail organisations.
• Rent trajectory improving: Rent as a percentage of sales rose from 4.5% to 10% and has now come down to 8%; the target is 6–7.5% (ballpark 7%), and new stores are being planned at less than 7%.
• UP and Bihar still under-penetrated: Even in districts where V-Mart is already present, management sees potential for 50–70% growth in store count over the next five years.

Unlimited (South Market) & LimeRoad

• Unlimited is the growth engine: The South market delivered 28% revenue growth and a 63% EBITDA increase, supported by strong throughput from new stores and continuous operational efficiencies; the company is trying to open more new stores in that market.
• Sales per square foot delta will persist: Unlimited will not close the gap to V-Mart on this metric because V-Mart carries an FMCG/kirana business (10–12% of customers) with inherently higher sales per square foot, while Unlimited does more brands and premium; however, like-for-like growth should be higher in Unlimited.
• LimeRoad turnaround: Efficiency, execution discipline, technological changes, and AI utilisation for loss prevention have cut down almost 70% of losses from last year; almost half of business from that area is now omni, and omni is showing promising results.

Guidance & Commitments

Key Metrics