Release Date: January 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- V2 Retail Ltd (BOM:532867, Financial) reported a record PAT of INR 65.6 crores for the nine months ended December 2024, surpassing the highest-ever yearly PAT.
- The company achieved a robust same-store sales growth (SSG) of 31% in the nine months of the financial year.
- V2 Retail Ltd opened 45 new stores and closed only two, increasing the total store count to 163 by January.
- The company reported a 58% YoY growth in revenue from operations for the third quarter, reaching INR 590.9 crores.
- EBITDA for the third quarter grew by 83% YoY, with a margin increase from 16.3% to 18.9%.
Negative Points
- Gross margin for the nine months stood at 29.8%, slightly down from 30.3% in the corresponding period last year.
- The company anticipates that the average selling price (ASP) may not increase significantly, with a potential fluctuation of plus or minus 5% to 10%.
- V2 Retail Ltd faces challenges in maintaining consistent product delivery due to unorganized vendors lacking ERP systems.
- The company has a credit limit of INR 75 crores, primarily used for bill discounting, indicating reliance on external financing.
- Despite the positive outlook, the company acknowledges the need for continuous improvement in store aesthetics and customer experience.
Q & A Highlights
Q: You had guided for a PAT of around INR 60 crores for the whole year, and now you've already achieved that in Q3. Does this mean you expect Q4 to be EBITDA positive but PAT flat, or can we expect some PAT in Q4 as well?
A: Eid is in March, so we are expecting a positive PAT number in Q4 as well. - Akash Agarwal, CFO, Whole-time Director
Q: How long do you think you can continue this kind of 50% year-on-year sales growth?
A: The plan is to continue this growth for the next decade. This is just the beginning for us, and we want to grow at least 50% revenue for the next 10 years. - Akash Agarwal, CFO, Whole-time Director
Q: Are you planning to raise some capital for opening around 100 stores next year, or will it be entirely internally accrued?
A: The 100 stores planned for next year will be opened through internal accruals. Our cash flows enable us to do so. However, if the market situation is favorable, we might consider having some extra cash on the books. - Akash Agarwal, CFO, Whole-time Director
Q: Can you elaborate on the key growth enablers that are yielding such great results?
A: We have started and implemented 50 different projects, with another 50 in progress. These include product development, supply chain improvements, and inventory freshness. Our product development currently accounts for 35% of our offerings, and we aim to increase this to 80% by next summer. - Akash Agarwal, CFO, Whole-time Director
Q: What is your strategy for dealing with competition in the value fashion industry?
A: We see competition as an opportunity. India has a large unorganized retail sector, and even with more organized players entering, the market is big enough to accommodate several national-level players. The shift from unorganized to organized retail is accelerating growth, and we expect the industry to grow at a CAGR of 13% to 15% over the next decade. - Akash Agarwal, CFO, Whole-time Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
