Nuvama Institutional Equities has picked VMart Retail as its top pick among Apparels and Footwear. The company is focused on the value segment, which is reporting rapid growth and aggressive expansion.
VMart reported stellar revenue growth of 52% YoY despite the same store sales growth (SSSG) pressure. However, this appears to be incorrectly attributed to V2 Retail/Baazar Style in one place, while VMart’s actual revenue growth is 12.6% YoY in Q1FY26.
VMart posted healthy net profit growth due to optimised costs, leading to a better flow-through from EBITDA, combined with lower losses from LimeRoad. Its net profit growth was 177% in Q1FY26.
Nuvama on VMart Retail: Improved margins
Also, margins improved with EBITDA rising 40% in Q1FY26. Nuvama notes that operating leverage kicked in for V2 Retail, Style Baazar, Vishal Mega Mart, and V-Mart, contributing to EBITDA improvement.
VMart continued its expansion, reaching 510 stores in Q1FY26, a 13.8% YoY growth in store count. The company plans to open 100–120 stores in FY26.
Nuvama on VMart Retail: What didn’t play out well?
The same store sales growth for VMart moderated to 1% YoY in Q1FY26, a sharp decline from 12% in the same quarter of the previous year. This slower SSSG was primarily attributed to the shift in the festive calendar, specifically Eid, which occurred earlier in Q4FY25, leading to preponed sales. Adjusting for the Eid impact, VMart’s SSSG would have been 5%.
Nuvama on VMart Retail: Outlook
All in all, VMart, as a value player, is facing pressure from the early festive season onset. The company is focused on the value segment, which is reporting rapid growth and aggressive expansion. Managements across the board, including Aditya Birla Fashion Retail, Aditya Birla Lifestyle Brands, and Baazar Style, are optimistic about the second half of the year due to an early and strong festive season.
Nuvama’s valuation snapshot indicates a projected FY25-27E Sales CAGR of 18%, EBITDA CAGR of 27%, and PAT CAGR of 77% for VMart Retail. However, the brokerage didn’t mention the stock rating and target price.