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V2 Retail
Our verdict on V2 Retail isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Current Sales Per Square Foot (PSF) per month is ₹948 for H1 FY26, showing progress but still below the long-term target of ₹1,200. (3 in progress across 3 tracked commitments)
“Even if we reach INR1,200 PSF at the national level old and new stores combined in the next 3 years, that would be amazing trajectory for the business.”
Management indicates that inventory turnover days remain stable compared to the previous year, despite the rapid pace of expansion. (1 in progress, 1 missed across 2 tracked commitments)
“So currently we keep about 10 to 12 days of sales cover at the store. We plan to bring it down to just 3 to 4 days except the display stock.”
The company plans to open 30% to 40% of new stores in newer regions and 50% to 60% in core strong regions. — target: 30-40% new regions / 50-60% core regions (+1 more commitment)
“So, we are looking to open 30% to 40% new stores in the newer regions that we have entered. And of course, 50% to 60% will come from our core strong regions.”
Management plans to launch an omnichannel strategy in the future using stores as dark warehouses. — target: Omnichannel launch (+1 more commitment)
“Whereas, if we are doing omnichannel, and which we are planning to do and we will launch in the future, where you are using your store inventory as a dark warehouse and delivering from the store itself within a very small radius”
Capex per store is expected to be approximately Rs. 1.2 crores to Rs. 1.3 crores, with total store investment (including inventory) at Rs. 2.7 to 2.8 crores. — target: Rs. 1.2-1.3 crores (Capex) (+2 more commitments)
“It's about Rs. 2.6 crores and it will increase because of the price increase. So, it will become around Rs. 2.7 crores-Rs. 2.8 crores now. That includes CAPEX and inventory. So, the CAPEX would be about Rs. 1.2 crores-Rs. 1.3 crores and the rest would be paid inventory.”
See the full cited Management analysis of V2 Retail
How durable is the business?
Women's wear (Ladies Wear) share expanded from 27% to 29% of the total revenue mix, showing strong growth momentum. (5 expanding across 3 engines)
“Men's would be about 41%-42%. Women's wear is about 27%. And kids is about 25%.”
V2 Retail is aggressively expanding its footprint, opening 28 stores in Q1 FY26 and targeting 100-120 net additions for the full year. Expansion is diversifying into 25 states, with 20-25% of new stores in 'virgin' or newer geographies. (5 expanding)
“Importantly, our current store footprint has crossed 350 stores nationwide, marking a major milestone in our journey.”
Operational efficiency is improving as Net Working Capital days reduced from 37 days in FY25 to 34 days in Q1 FY26, enhancing cash flow. (2 expanding)
“We want to be the best paymasters in the industry. And we want to be the priority vendor for all our suppliers. And we want to work them, help them with their working capital.”
Revenue grew by 52% YoY, driven by massive volume growth of 50%. The company is leveraging its scale to improve EBITDA margins through operating leverage as head office and warehouse costs are distributed over a larger store base. (3 expanding)
“We are now focusing on retail business only and have moved away from in-house manufacturing operations... Revenue for the 4th Quarter grew at 60% year-on-year to Rs. 797 crores.”
V2 Retail continues its aggressive geographic expansion within India, now operating across 21 states and 165+ cities. (2 expanding)
“So, we are looking to open 30% to 40% new stores in the newer regions that we have entered. And of course, 50% to 60% will come from our core strong regions.”
See the full cited Business Model analysis of V2 Retail
Where does growth come from?
SSSG is showing strong upward momentum, with the reported Q2 figure of 23.4% significantly higher than the 6-month average of 13.3%. (1 accelerating, 4 decelerating across 5 signals)
“The SSSG for Quarter 4 stood at 7.74%. ... we guide for 8% to 10% SSG going forward.”
The company is expanding its reach into new states like Gujarat and Maharashtra, where initial store performance has been described as phenomenal. (+1 more signal)
“Maharashtra also, we have opened three stores and two of them are performing phenomenal. So, we are looking to open 30% to 40% new stores in the newer regions that we have entered.”
The company expects to gain significant cost savings by centralizing the purchase of fabrics, which will act as a future profit booster.
“One is of course, consolidating and purchasing fabrics... we have the potential to save at least 3% to 5% there by centralizing and nominating fabrics.”
Profitability is improving through better product mix and inventory management, leading to higher gross margins. — Gross Margin: +270 bps YoY (+1 more signal)
“Gross margin was 30.3% compared to 27.6% in the corresponding quarter last year.”
The company has significantly increased its inventory levels to support its aggressive plan for opening new stores and ensuring products are always available. — Net Working Capital (NWC) days: 80% increase
“NWC days stood at 81 days compared to 45 days in FY25, The increase was primarily on account of increase in inventory holding to ensure seamless availability for existing stores and planned store additions”
See the full cited Future Growth analysis of V2 Retail
What could break the thesis?
Trajectory is INTENSIFYING. Management has increased the expansion target from 100 stores to 120-130 stores for FY26, and potentially 150 stores for FY27, following the QIP. This increases the pressure on management bandwidth and supply chain. (5 intensifying)
“325 Stores at the end of FY26 (Opened 139 & Closed 3)”
The risk is intensifying. Same Store Sales Growth (SSG) has dropped to ~5% in Q1 FY26, down from 8.6% in FY26 and 29% in FY25. (4 intensifying, 1 easing)
“Same Stores Sales Growth (SSG) ... 8.6% FY26 [vs] 29.0% FY25”
Store productivity is deteriorating. Sales per square feet (PSF) per month dropped to ₹ 794 in Q4 FY26 from ₹ 896 in Q4 FY25. On a full-year basis, PSF fell from ₹ 1,017 in FY25 to ₹ 925 in FY26. (1 intensifying, 2 easing, 2 stable)
“we opened 130 new stores and the new stores started about 70% of old stores per square feet sale... because we have opened so much new area this year, it gets the overall company per square feet sale down.”
The risk is intensifying as Net Working Capital (NWC) days have surged to 81 days in Q4 FY26, nearly doubling from 45 days in FY25. This is driven by a deliberate strategy to hold more inventory for existing stores and upcoming store launches. (1 intensifying, 4 easing, 1 high-severity)
“NWC days stood at 81 days compared to 45 days in FY25, The increase was primarily on account of increase in inventory holding to ensure seamless availability for existing stores and planned store additions”
Consolidated Net Cash from Operating Activities has turned positive at ₹ 223.0 Cr for 9M FY26, a significant reversal from the negative trend previously noted. (1 resolved, 1 stable, 1 high-severity)
“Cash generated from operations ... FY2026 (51) ... FY2025 226”
See the full cited Risk analysis of V2 Retail
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