V-Mart Retail Ltd’s shares fell about 4% on Wednesday after its latest business update came as a disappointment. Revenue from operations increased 13% in the June quarter (Q1 of FY26) from a year earlier. In comparison, revenue growth in FY25 was almost 17%.
Same store sales growth (SSSG), a measure of comparable sales over a period, came in at 1%, lower for the third consecutive quarter.
V-Mart-format SSSG stood at 1% vis-à-vis 7% in Q4 of FY25 and 10% in Q3 of FY25. Unlimited-format SSSG also came in at 1% in Q1 versus 10% in Q4 of FY25 and 11% in Q3 of FY26. As per V-Mart, after adjusting for the impact of advancing Eid to the previous quarter, overall SSSG was up 5% year-on-year in Q1, with the SSSG for both V-Mart and Unlimited at 5% each.
Calculated revenue per square foot increased by a modest 1% year-on-year to ₹2,032 in Q1, Motilal Oswal Financial Services said in a note. V-Mart opened 15 stores in Q1 and closed two, taking the total count to 510 as of 30 June.
Profit margins will be in focus when the company announces its Q1 results. V-Mart did well on the operating profit front in FY25, with its Ebitda margin expanding 394 basis points to 11.6%, helped primarily by a decline in other expenditure.
Investors will also watch for revenue contribution from LimeRoad, V-Mart’s digital marketplace, in Q1, details of which were not disclosed in the update. LimeRoad’s Ebitda loss dropped 57% in FY25 and a breakeven is not expected in FY26 as well.
Competitive intensity
“We believe that pre-pandemic Ebitda margin will take much longer to achieve as LimeRoad losses will continue to marginally impact Ebitda along with ESOP costs,” Nirmal Bang Institutional Equities said in a report dated 30 June.
V-Mart plans to open about 65 stores in FY26, which can aid revenue. While it continues to be a beneficiary of the shift from unorganised to organised retailing, competitive intensity has increased as many value retailers have expanded stores rapidly recently.
Moreover, the company’s focus on providing value to customers means the chances of a meaningful improvement in average selling price are lower. Stiff competition and a potentially muted demand recovery could mean investor sentiment is likely to stay subdued for the stock, at least in the near term.
