🟨 1. At a Glance
Once left for dead post its “Vishal Megamart” crash landing, V2 Retail has staged a wild comeback in Tier 2/3 India – reporting 84% PAT CAGR in 5 years, 178% 1Y stock return, and a recent sales boom with ₹628 Cr revenue in Q1FY26. But with a P/E of 94 and zero dividend in sight, is this a fashionable frenzy or just another fast fashion flameout?
🧵 2. Introduction with Hook
Remember Vishal Megamart? The original “kirana plus fashion” behemoth that collapsed harder than a 2009 Satyam balance sheet?
Well, say hello to its resurrection story – V2 Retail Ltd, a phoenix from the retail ashes, now flexing store openings, normalized SSSG (same store sales growth) of 10%, and nearly ₹2,000 stock price – up 178% YoY.
Is this India’s answer to Ross Dress for Less, or are we all just buying into the hype of ₹199 kurtis and 40% EBITDA on discount days?
🛍️ 3. Business Model – WTF Do They Even Do?
- V2 Retail is a value apparel and general merchandise retailer, operating in Tier 2 and Tier 3 cities, targeting middle-income Indians.
- Think: clothes, toys, cosmetics, home linen, and more – at budget-friendly prices.
- Operates exclusive branded outlets (EBOs) under “V2 Retail” – 28 new stores opened in Q1FY26 alone.
- Core pitch = affordable fashion for Bharat, aka ₹999 for 3 shirts combo while playing “Jhumka gira re…” on loop.
📊 4. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 538 | 629 | 839 | 1,165 | 1,884 |
| PAT (₹ Cr) | -13 | -12 | -13 | 28 | 72 |
| EBITDA Margin | 9% | 11% | 10% | 13% | 14% |
| ROE | -3.76% | -3.4% | -3.73% | 8.04% | 20.82% |
| Sales Growth YoY | -15% | 17% | 33% | 39% | 62% |
💡 Profit growth = 84% CAGR over 5 years, which deserves an “Applause” button… until you see the P/E.
📉 5. Valuation – Is It Cheap, Meh, or Crack?
- P/E = 94x 😵 (vs 52.5x median for sector)
- P/B = 19.6x 😳 (vs 5x sector average)
- Market Cap = ₹6,799 Cr
- ROE (3Y Avg) = 10.5%
So basically:
- Valuation = “Crack cocaine chic”
- Fundamentals = Decent
- Dividend = Non-existent (0% payout)
Fair Value Range?
Let’s be conservative and say:
- Fair P/E = 40–45x on FY25 EPS of ₹20.82
- → FV = ₹833 to ₹937
- CMP = ₹1,964
⚠️ That’s a ~50% premium baked in already.
🍲 6. What’s Cooking – News, Triggers, Drama
- 🔥 Q1FY26 Sales Jump: ₹628 Cr revenue, up 51% YoY
- 🏬 28 new stores opened – store count expansion = growth steroid
- 🧾 Same-store sales growth (SSSG) = 10% (normalized)
- 🏦 Credit Rating Upgrade (IND A-/A2+)
- 📈 FII/ DII increasing stake since FY24 – from 0.8% DII to 6.7% in Mar 2025
- 🧹 Better inventory days (from 264 to 159), lower working capital cycles = leaner ops
🧾 7. Balance Sheet – How Much Debt, How Many Dreams?
| Year | Borrowings (₹ Cr) | Reserves (₹ Cr) | Networth (₹ Cr) |
|---|---|---|---|
| FY23 | ₹424 | ₹213 | ₹247 |
| FY24 | ₹525 | ₹240 | ₹275 |
| FY25 | ₹850 | ₹312 | ₹347 |
- Debt jumped from ₹424 Cr → ₹850 Cr in just 2 years 🧨
- But reserve build-up is matching it somewhat
- D/E ratio climbing → leverage is a risk if sales slow down
💵 8. Cash Flow – Sab Number Game Hai
- FY25 CFO = ₹223 Cr (solid)
- FCF = Negative due to high store capex and working capital
- 🧯 Positive: Operating cash flows are healthy and consistently improving
- ⚠️ Negative: Investments in fixed assets + store expansion are aggressive – no brakes
📐 9. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| OPM % | 10% | 13% | 14% |
| ROCE % | 4% | 11% | 17% |
| Inventory Days | 184 | 199 | 159 |
| CCC (Days) | 114 | 107 | 54 |
| Working Capital Days | 88 | 80 | 49 |
- Very efficient operations now – CCC halved in 2 years
- ROCE and OPM are finally in sync
- Still no dividend tho 🥲
💸 10. P&L Breakdown – Show Me the Money
Let’s look at Mar 2025 Quarter:
- Sales = ₹498 Cr
- EBITDA = ₹57.8 Cr → OPM = 11.6%
- Net Profit = ₹6.44 Cr → NPM = 1.3%
- Interest = ₹21.4 Cr 😮 (eating into bottom line)
So basically, “We make money, then we pay rent and interest, then we think about profit” – a classic retail P&L.
🧵 11. Peer Comparison – Who Else in the Game?
| Company | P/E | ROCE | OPM | PAT 12M | FV Range (EduEstimate) |
|---|---|---|---|---|---|
| V2 Retail | 94.4 | 16.6% | 13.7% | ₹72 Cr | ₹833–₹937 |
| Trent | 134.5 | 30.7% | 16.5% | ₹1,436 Cr | ₹4,200–₹4,500 |
| Go Fashion | 52.5 | 14.9% | 31.6% | ₹93.5 Cr | ₹750–₹850 |
| Vedant Fashions | 50.4 | 26.6% | 46.3% | ₹388 Cr | ₹675–₹775 |
Verdict: V2’s margins and brand moat are lower than peers, but growth rate is among the best. Still… valuation is higher than it probably should be.
🧠 12. Miscellaneous – Shareholding, Promoters
- 👑 Promoters hold 54.24% (no major pledging)
- 🪙 FIIs trimmed stake from 6.6% → 1.3% (hmm…)
- 🏦 DIIs ramped up from 0.4% → 6.7% (interesting switcheroo)
- 🪢 35,000+ retail shareholders – classic SME cult stock story
- 👔 MD: Ram Chandra Agarwal – same guy behind Vishal Megamart
🧑⚖️ 13. EduInvesting Verdict™
🧵 “Vishal se V2 tak ka safar” has been wild.
- Profits are real
- Sales are booming
- Margins improving
- Retail expansion is fast and furious
But…
- P/E is sky-high
- Debt is rising
- FIIs exited quietly
- No dividend still = zero cash reward
So what are you buying? A 178% rerated fashion chain… or a ₹2,000 kurta priced like Gucci?
✍️ Written by Prashant | 📅 10 July 2025
Tags: V2 Retail, Vishal Megamart, Smallcap Retail, Fashion Retail India, Tier 2 Growth, Store Expansion, EduInvesting, Retail Sector, SME Success Story
