V-Mart Q1 Results Review - Improvement In Growth Trajectory Coupled With Sharp Margin Improvement: Systematix

Systematix Research Report

V-Mart Retail Ltd.’s reported in-line topline growth, with strong margin performance led by reduction in Limeroad losses, controlled expenses, improving margins in Unlimited and better mix at V-Mart.

Revenue grew 15.9% YoY led by +20% growth in V-Mart (83% of revenue) and +5% growth in Unlimited (16% revenue) while Limeroad revenue declined 33% (1% revenue).

The strong double digit growth was led by volumes, the company continued to focus on growing volumes while lowering average selling price. ASP remained flat on an overall level while ASP for apparel declined 3%. Due to focus on lower price points, we expect ASP to remain around current levels going forward with the company targeting to attract value conscious customers.

Same-store sales growth stood at 11% (V-Mart at 12%, Unlimited at 8%), led by strong rise in footfalls by 36%. Gross margin declined 57 bps to 35.2% while Ebitda margin expanded 486 bps to 12.6%. Limeroad losses reduced by 60% YoY/ 15% QoQ to Rs 103 million.

Mix improvement in V-Mart led to expansion in the company's margins by 200 bps to 13.4% while Unlimited margins improved 450 bps to 18% led by cost controls. Adjusted PAT stood at Rs 121 million compared to a loss of Rs 219 million in Q1 FY24.

The company opened seven new stores (five under V-Mart and two under Unlimited) and closed three Unlimited underperforming stores during the quarter. Total number of stores now stands at 448 (V-Mart 370 and Unlimited 78), with target to open 50 stores during FY25.

Inventory during end of the quarter stood at Rs 6.71 billion, reduced by Rs 540 million (-7.5% YoY) thus improving the working capital.

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