V-Mart Retail exits FY25 in style, but competition threat lingers
Investors in V-Mart Retail Ltd shares appear thrilled with its business update for the March quarter (Q4FY25) and are likely expecting another good year. V-Mart’s shares shot up over 10% on Wednesday. This comes after the stock had fallen a whopping 35% from its 52-week highs of ₹4,520 apiece seen on 31 October. So, valuations were relatively cheaper.
Year-on-year growth in total revenue, which includes V-Mart and LimeRoad digital marketplace, was 17% during Q4. In 9MFY25 too, growth was 17%. Store additions also aided Q4 growth. Besides, same-store sales growth (SSSG) came in at 8% versus 10% and 15% in Q3 and Q2, respectively. This SSSG is for combined V-Mart and Unlimited stores. SSSG measures comparable sales over a period of time.
SSSG for V-Mart (core), meaning just the V-Mart format, stood at 7% in Q4, versus 10% in Q3. “We believe that less severe winters in north India could be a reason for the moderation in SSSG for V-Mart (core),” said Motilal Oswal Financial Services.
To be sure, FY25 was marked by decent growth and robust earnings improvement for V-Mart. Reported Ebitda for 9MFY25 was up as much as 79% year-on-year to ₹309 crore. Excluding LimeRoad, FY25 SSSG and revenue growth stood at 11% and 18%, respectively.
V-Mart’s recovery momentum from an unfavourable rural cycle and past capital allocation stumbles remains on track, according to HDFC Securities. “Footfall/sales densities continue to inch back to normalcy; rental bills are getting re-calibrated downwards; WC (working capital) pain is alleviating; and initial attempts of increasing consumer wallet share (by introducing new categories) are encouraging and likely to improve sales density further,” said an HDFC report dated 20 March.
One challenge is that the base is now relatively high, and so how the growth pans out is key. In an interview with CNBC-TV18, Lalit Agarwal, managing director of V-Mart, said the company is looking to add net 60-65 stores in FY26 and aims for double-digit growth. It opened net 53 stores in FY25, taking the total count to 497 at FY25 end.
Competition is another worry. As Motilal Oswal points out, “With aggressive store expansion by many retailers, rising competition in value retail remains a key thing to watch out for, given V-Mart’s low profitability.” Despite Wednesday’s gains, V-Mart’s shares are still about 16% down so far in 2025 amid the broader market turmoil.
Also Read: Musical chairs in retail: top execs swap companies as competition heats up, growth slows
