Vishal Mega Mart Ltd has completed a year on the stock exchanges, and investors can scarcely complain. The shares are up 18% from the closing price on the listing date of 18 December 2024 and nearly 70% above the IPO issue price of ₹78.
After delivering about 12% same-store sales growth in the half-year ended September (H1FY26), management is confident of sustaining double-digit growth for the full year. That confidence rests on a loyal customer base, tailwinds from the goods and services tax (GST), a private-label-heavy assortment, and early traction in quick commerce.
In recent meetings with analysts, the takeaway was clear: the management is not looking to reinvent itself, but fine-tuning a model that is already delivering.
Private labels remain the anchor. Nearly three-fourths of revenue now comes from in-house brands, giving Vishal tighter control over pricing, quality and design. Over time, the company has nudged shoppers towards higher-value purchases while keeping entry price points intact. Management says customers often trade up sharply during festive periods—and Vishal wants to capture that upgrade.
Competition, too, is framed on different terms. Avenue Supermarts Ltd, for instance, derived about 57%, 20% and 23% of its H1FY26 revenue from foods, non-food FMCG, and general merchandize and apparel (GM&A), respectively. Vishal’s mix looks very different: 47% from apparel, 27% from general merchandize and 25% from FMCG.
This contrast helps explain why Vishal has sustained growth without resorting to aggressive price wars. Revenue rose by around 20% in FY25 and again in H1FY26.
Store expansion is the other leg of the growth story, particularly in southern India. “Management noted that lower throughput in South India is a function of relatively new stores (3–4 year-old versus 10+ years in core states). However, driven by higher apparel salience, the profitability in South is similar if not better than the pan-India level, which has buoyed management to accelerate store expansion in South India,” said a Motilal Oswal Financial Services report on Tuesday.
Vishal plans to step up additions in Bengaluru, Hyderabad and Kerala. The company added 25 net new stores in the September quarter, taking the total store count to 742.
Quick commerce is emerging as a supporting act. Vishal’s hyperlocal delivery service is now live in about 460 towns and contributes between 2% and 9% of store sales, depending on market maturity.
Operational efficiencies are also helping earnings. Supply-chain and logistics costs are below 3% of revenue, while warehouse automation is helping rein in manpower expenses. That said, margin upside is likely to be incremental. Gross-margin gains are expected to be reinvested, with Ebitda expansion driven more by operating leverage than pricing power.
Volumes and throughput, therefore, remain the key swing factors. Any prolonged slowdown in discretionary demand would show up quickly in margins.
Emkay Global Financial Services expects strong profit-after-tax CAGR of 32%, led by 19% revenue growth and gradual margin gains. Here, revenue growth would be driven by 10% and 9% CAGR in retail space and revenue per sq. ft, respectively. Emkay also points to strong cash generation, which should comfortably fund expansion.
In short, Vishal is betting on discipline, scale and repetition—and, for now, the script is playing out. But the stock, trading at about 59x FY27 estimated earnings, according to Bloomberg, already reflects much of what is going right. With sustained double-digit growth and smooth execution largely priced in, the room for error is limited.
