What’s the outlook for the retail sector as festive sales gain momentum and GST new rates are expected to boost consumption levels? Well, Nuvama’s Q2FY26 preview is cautiously optimistic. They pointed out that the policy tailwind from quarter-end GST rate cuts has already begun to show in consumption patterns (most visibly in electronics) but a high base, volatile gold prices and lingering softness in discretionary spending keep the picture mixed.
Nuvama on retail sector: Key numbers and market outlook
Nuvama’s coverage universe of xxx indicated revenue increasing to Rs 15,914.7 crore from Rs 13,215.0 crore up 20% YoY. Sequentially it rose to Rs 15,914.7 crore from Rs 14,564.0 crore up 9% QoQ. These topline gains sit atop a margin environment that is stabilising in some pockets and under pressure in others as companies ramp promotions to chase demand.
The report flagged three structural demand drivers for Q2
(a) GST rate cuts that improve take-home pricing for lower-ticket items and should spur TV and accessories demand in electronics
(b) An early and front-loaded festive calendar that shifted part of seasonal demand into the quarter
(c) Aan uneven recovery strong in value and certain categories, weak in others (notably much of QSR and parts of footwear).
Nuvama on Jewellery sector: Festive lift, but a tough base and volatile gold
The jewellery segment benefited from an early festival season, helping to offset the high base from last year’s customs-duty related demand spike. Titan posted 20% overall revenue growth YoY, with core standalone jewellery up 18%; Nuvama expects adjusted EBIT margins for Titan’s jewellery to be 11%, pressured by increased promotional spends. Kalyan’s India operations surged 31%, aided by Navratri; Kalyan added 15 stores in the quarter. The note also noted sharp gold price moves average gold prices were up about 35%+ YoY and volatile, a material headwind for volumes and mix, as per the report. PN Gadgil reported record festive sales of Rs 618 crore during Navratri and Dussehra, a 65% YoY jump, the report added.
Nuvama on Quick Service Restaurants (QSR): Store growth likely, but demand soft
The sector is expanding footprint but same-store sales remain muted. Nuvama projects combined QSR revenue growth of 12% YoY driven chiefly by openings. Jubilant Foodworks reported 15.8% standalone growth with LFL at 9.1%, and the house view is for EBITDA margin moderation due to gross margin pressures. Devyani is expanding its brand mix (New York Fries, Tea Live, Sanook Kitchen) and pursuing store additions despite weak consumption. Sapphire and other franchised players are expected to post weak SSSG, reflecting a broader moderation.
Nuvama on Electronics: GST cut to the rescue
Electronics looks like the near-term beneficiary of GST relief. Nuvama expects coverage names to deliver double-digit revenue growth led by a television uptick and new-iPhone related demand. Electronics Mart India Ltd is set to add 16 stores, with gross margins expected to remain stable (14.5%) and EBITDA margins improving towards 6.5%. Aditya Vision is expected to report 17% revenue growth driven by GST benefits and Central UP expansion.
Nuvama on Footwear: Premiumisation protects margins, volumes lag
Footwear firms continue to face weak volumes. Metro’s margin profile should benefit from higher sales mix of premium products; Bata’s zero-base merchandising initiative should protect margins but not offset weak productivity Nuvama expects Bata’s profits to contract 38% YoY. Lower GST rates on items priced under Rs 2,500 should ultimately help volume recovery for mass brands such as Campus and Bata.
Nuvama on Apparel, innerwear: Mixed bag
Performance is highly company and sub-category specific. Mid-premium and value segments show the clearest traction. Trent’s standalone revenue growth slowed to 17% YoY and same-store sales are estimated to be negative to flattish. V-Mart delivered 22% revenue growth and 11% SSSG, helped by a preponed festive calendar and 25 store openings (two closures); EBITDA margins are expected to expand materially (to 10.2% from 5.8% YoY). ABFRL’s top line is modeled at Rs 2,032 crore with EBITDA margins under pressure at 4.1% owing to higher advertising spends and store dynamics.
A detailed analysis of key companies
Nuvama on Titan
The report recorded 20% revenue growth and an 18% increase for standalone jewellery. Promotional intensity has pushed estimated jewellery EBIT to 11%, reflecting margin trade-offs for market share during festival season.
Nuvama on Kalyan Jewellers
India operations rose 31%, driven by Navratri consumer traction. Store additions numbered 15 in the quarter.
Nuvama on PN Gadgil
Festive sales rose to Rs 618 crore during Navratri/Dussehra, up 65% YoY.
Nuvama on Jubilant FoodWorks
Standalone growth 15.8% YoY with LFL 9.1%. Margins to be steady but under gross-margin pressure.
Nuvama on V-Mart
Revenue growth 22% YoY, same store growth up11%. The company opened 25 stores, closed 2. Nuvama sees EBITDA margin recovery to 10.2% expected.
Nuvama on Shoppers Stop
Revenue rose to Rs 1,106.3 crore from Rs 1,068.1 crore up 4% YoY; gross margin to remain 40% and EBITDA margin is expected to improve to 14.3% from 13.7% YoY.
Nuvama on VIP Industries
Revenue declined to Rs 517.0 crore from Rs 544.3 crore down 5% YoY. Gross margin is expected to improve to 47% (from 45.1%).
Nuvama highlights risks in retail space
Nuvama listed the usual suspects, a high comparative base (notably customs-duty driven demand in Q2FY25), volatile gold prices, weather and festival timing distortions, and intensifying competition (including quick-commerce pressure for grocery players). QSR margins remain sensitive to both consumption weakness and price/mix shifts. The GST cut is presented as a near-term positive, but not a panacea, demand still needs to follow through to restore sustained volume growth.