At a Glance
V2 Retail is making “budget shopping” look like a luxury stock play. Q1 FY26 delivered revenue ₹632 Cr (+52% YoY) and PAT ₹25 Cr (+51% YoY), riding on aggressive store openings (28 new stores this quarter). But here’s the kicker – it trades at a P/E of 84, because why not pay for cheap clothes at expensive valuations? Promoters remain steady at 54%, while DIIs are slowly adding. The company just approved a ₹400 Cr fund raise, so dilution is on the menu.
Introduction
V2 Retail is the phoenix that rose from the ashes of the old Vishal Retail brand. Focused on Tier-II and Tier-III cities, it serves the growing “neo middle class” with affordable apparel and merchandise.
In the last three years, it’s been on steroids – 3-year sales CAGR 44%, profit CAGR 101%, and stock up 154%. The business story is exciting, but with a P/E higher than most luxury brands, one bad quarter could turn this growth party into a hangover.
Business Model (WTF Do They Even Do?)
The company operates a chain of V2 Retail stores in smaller cities, offering apparel and general merchandise at affordable prices. Its USP: low-cost sourcing, aggressive pricing, and fast expansion.
Revenue streams:
- Apparel (major chunk) – value fashion for men, women, kids.
- General Merchandise – household products, footwear, accessories.
- E-commerce tie-ins – minimal, as the focus is physical expansion.
The playbook? Flood small cities with stores, win middle-class wallets, and scale margins slowly.
Financials Overview
Numbers are screaming growth:
- Q1 FY26 Revenue: ₹632 Cr (↑52% YoY)
- Q1 PAT: ₹24.7 Cr (↑51% YoY)
- FY25 Revenue: ₹1,884 Cr (↑62% YoY)
- FY25 PAT: ₹72 Cr (↑157% YoY)
- OPM: 14% (solid for retail)
- ROE: 23% (very strong)
Verdict: Fantastic growth and profitability, but the valuation is equally fantastic (read: scary).
Valuation – Is It a Bargain? No.
- P/E Multiple Approach
- Retail sector P/E: ~50
- EPS (TTM): ₹23.2
- Fair Value ≈ 50 × 23.2 = ₹1,160
- EV/EBITDA
- EBITDA FY25: ₹258 Cr
- Sector EV/EBITDA: 20×
- EV ≈ ₹5,160 Cr → per share ≈ ₹1,300
- DCF (Optimistic)
- Growth 25% for 5 years, discount 12%
- Intrinsic Value ≈ ₹1,400 – ₹1,600
🎯 Fair Value Range: ₹1,200 – ₹1,600 vs CMP ₹1,956. Market is pricing in aggressive growth continuation.
What’s Cooking – News, Triggers, Drama
- Q1 FY26: Stellar growth, PAT +51% YoY.
- Store Expansion: 28 new stores opened this quarter, fueling sales.
- Fund Raise: ₹400 Cr via equity/convertibles – expansion or dilution?
- Risks: Execution, fashion trends, and valuation pressure.
Balance Sheet – Auditor’s Roast
| (₹ Cr) | Mar 23 | Mar 24 | Mar 25 |
|---|---|---|---|
| Assets | 793 | 1,027 | 1,628 |
| Liabilities | 547 | 787 | 1,316 |
| Net Worth | 213 | 240 | 312 |
| Borrowings | 424 | 525 | 850 |
Commentary: Assets doubling, debt rising sharply. Expansion is debt-fueled, so execution needs to be flawless.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Ops | 86 | 93 | 223 |
| Investing | -12 | -39 | -131 |
| Financing | -76 | -50 | -93 |
Commentary: Operating cash flows strong, but capex-heavy growth keeps financing outflows high.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 23% |
| ROCE | 16.6% |
| P/E | 84 |
| PAT Margin | 4% |
| D/E | 0.52 |
Commentary: High ROE, decent ROCE. P/E sky-high, D/E creeping up.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 839 | 1,165 | 1,884 |
| EBITDA | 85 | 149 | 258 |
| PAT | -13 | 28 | 72 |
Commentary: From losses to profit machine in 2 years. Market is rewarding this turnaround.
Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| V2 Retail | 2,102 | 80 | 84 |
| Trent | 17,134 | 1,436 | 125 |
| Aditya Vision | 2,260 | 108 | 46 |
| Vedant Fash. | 1,428 | 396 | 48 |
Commentary: V2 trades at a premium to peers like Aditya Vision and Vedant Fashions, closer to Trent. High expectations baked in.
Miscellaneous – Shareholding, Promoters
Promoters steady at 54%. FIIs slowly increasing (now 1.9%), DIIs rising to 7.3%, retail holding falling slightly. Institutional confidence is building, but still low compared to Trent-level hype.
EduInvesting Verdict™
V2 Retail is killing it in the Tier-II/Tier-III value retail segment. Store expansion, strong revenue growth, and improving margins make it an exciting growth story. However, the stock’s P/E of 84 means the market is already pricing in perfection. Any slowdown in growth or fashion missteps could trigger a sharp correction.
Strengths:
- Aggressive growth in revenue and profits
- High ROE and operational efficiency
- Strong Tier-II/III market positioning
Weaknesses:
- Rising debt for expansion
- High valuation leaves no margin for error
- Low dividend payout
Opportunities:
- Expanding footprint across India
- Rising disposable income in small cities
- Possible e-commerce tie-ups
Threats:
- Execution risks in rapid expansion
- Competition from big retail players
- Economic slowdown affecting consumption
Final Take:
V2 Retail is like a value fashion store charging luxury brand prices – exciting for growth investors, risky for value hunters. Hold if you love the story, but new buyers should wait for a dip.
Written by EduInvesting Team | 30 July 2025SEO Tags: V2 Retail, Value Fashion, Tier-II Cities Retail, Q1 FY26 Results
