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V2 Retail Ltd aims 50% revenue growth over the next two years, supported by aggressive store expansion. This target comes after several years of strong growth. In FY26, the value fashion retailer with a thrust on India’s tier-2 and 3 markets, saw an impressive 63% year-on-year revenue growth to ₹3,067 crore. Growth in FY25 and FY24 stood at 39% and 62%, respectively, to ₹1,885 crore and ₹1,165 crore. V2 plans to add 170–200 stores in FY27, almost half of the 381 stores at the end of the June quarter (Q1FY27). It has already signed MOUs for the next 100 stores it plans to open. But it’s crucial to track when the new stores will become more productive. “The new stores per square feet sale is about 34% less than our mature stores,” said the company’s management in the Q1 earnings call. “More than two years old stores are already performing at a very high level of almost ₹1,070 to ₹1,100 per square feet of sale.” One metric that can help bridge this gap is higher same-store-sales-growth (SSSG), which stood at about 7.5% in Q1. “SSSG remains the primary earnings driver, with every 1% change in SSSG translating into a 7-11% change in Ebitda and PAT, reflecting the strong operating leverage embedded in the model,” said Motilal Oswal Financial Services. Improving repeat customer rates helps SSSG outlook. The company points out that in the last three years, customers who came back to V2 within the first year have moved up from 40% to almost 55%. Meanwhile, the impact of expansion on margins needs to be seen. The company expects gross margins to remain around 29–30% and hopes to maintain Ebitda margin despite new area addition. While stores are Ebitda-positive from the first month, the economics improve as productivity rises. Besides, V2 inventory levels are elevated, partly because of higher safety stocks and vendor prepayments. It is looking to maintain inventory at around 100 days and creditors at 45-50 days. “Alongside this normalization, sustaining SSSG in the targeted ~8–10% range will be key to tracking whether the underlying growth trajectory remains intact,” said a report by Yes Securities. The other risk is execution. Opening around 200 stores in a year increases risks of site selection, new geographies and store-level execution, while management itself expects rapid expansion to keep margins from improving materially in the near term. “FY27 expansion is expected to be fully funded through internal accruals, making working-capital normalization key given current net debt of ₹246 crore,” according to Yes Securities. Note that V2’s operating cash flow turned negative at around Rs96 crore in FY26. Promoter holding declined to 51.43% in Q1FY27 from 54.22% a year earlier. The company’s shares have gained 35% over the last one year, but the stock is down 11% so far in 2026. In the coming quarters, investors should closely track if the rapid expansion is translating into improving store economics or if the pace of expansion is faster than pace of stores maturing.
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