With an expanding economy, people’s aspirations and income levels also grow. This growth fuels consumption across categories. Notably, in India, rural migration to urban centers is the primary driver of lifestyle consumption. This shift continues to drive strong demand for retail products. That’s where value retail has quietly carved its place.
These retailers have become the face of organized consumption for millions of first-time shoppers who seek branded quality without paying a premium. And that demand is no longer confined to metros; it’s spreading steadily into tier-II and tier-III cities, where rising incomes and aspirations meet price sensitivity.
Value retailers have faster and optimized inventory cycles. According to Vishal Mega Mart, the total addressable retail market is expected to grow to about ₹112 trillion by FY28, up from ₹72 trillion in FY23. Value retailers are poised to be big beneficiaries of this shift. Let’s take a look at three such players expected to gain from this shift.
#1 Vishal Mega Mart: Scaling the ‘Next Trent’ Model
Vishal Mega Mart is a diversified value retail chain focused on the mass market in India. Its core proposition is making aspirations affordable for consumers. This mainly means bridging the gap between growing aspirations and affordability. It targets the largest consumer segment, accounting for 66% of households in India.
Scaling Up Store Infrastructure
It is one of the top three offline diversified retailers in India by retail volume. As of Q3FY26, its store count stands at 771 across 517 cities. The stores are geographically diversified with 298 in North, South (205), East (192), and West (76). Additionally, 200 of these stores are located in Tier I cities, Tier II (188), and Tier III (383), indicating a focus on smaller towns.
Vishal Mega Mart Operational Highlights
Vishal’s revenue rose 17% year-on-year to ₹3,670 crore in Q3FY26, led by a 9.6% increase in adjusted same-store sales. The apparel segment contributed 45%, followed by general merchandise (28%) and FMCG (27%). Vishal’s own brands accounted for 74.2% of revenue, with the remainder from third-party brands.
Driving Growth through Private Labels
This high contribution reduces reliance on third-party brands and gives Vishal greater control over its supply chain and merchandise mix. This strategy also offers a higher margin than third-party brands. Vishal uses its own brands to actively shift customers toward higher-value products, a strategy that is fueling same-store sales growth.
The company uses its own brands to create a ladder of price points: Opening, Mid, and Premium. This structure allows them to continuously upgrade customers from lower to higher price points. This strategy is yielding results. In 9MFY26, the company’s highest price points (Fashion) grew at 14%, significantly faster than the opening price points (6%).
The 16.3 Crore Loyal Customers Driving 95% of Revenue
Quick Commerce continues to expand, with 723 stores in 485 cities. The platform now has 1.2 crore registered users, and its contribution to store revenue continues to grow. What sets Vishal apart is its large and loyal customer base of 16.3 crore. Vishal operates a mobile-based loyalty program where consumers can enroll to earn and redeem points on all transactions.
The group accounted for 95% of gross revenue (including GST) in Q3FY26. On the margin front, its gross margin was 29.1%, while EBITDA (earnings before interest, taxes, depreciation, and amortization) margin rose to 16.5%. Net profit rose 19.1% to ₹313 crore.
The 25% EBITDA and 30% PAT Growth Ambition
Looking ahead, the company is on track to exceed its guidance of opening 80-100 stores for FY26. Having already opened 80 stores in 9MFY26, it expects to be at or slightly above 100 stores by the end of the year. Subsequently, stores could be expanded to 110-115 stores upon the acquisition of profitable properties.
Expansion remains aggressive in South India, particularly in Kerala (where 20 stores are in the pipeline) and Andhra Pradesh. Additionally, management expressed confidence in sustaining its current growth trajectory in the near to medium term.
The company expects to maintain a total sales growth rate of approximately 19-20%, with double-digit SSSG (approximately 10%). This will be driven by a mix of volume growth , higher billed value and an increase in average selling price. Historically, the company has targeted EBITDA growth of 25% and PAT growth of 30%, a trend it expects to continue.
#2 ABFRL: The Strategic Pivot Toward Premiumization
Aditya Birla Fashion and Retail (ABFRL), a part of Aditya Birla Group, is a major Indian fashion and retail conglomerate. It operates across a wide range of segments, including value and youth fashion, ethnic wear, and luxury retail. ABFRL operates large-format retail stores catering to the middle and youth segments.
Strategic Pivot to Premiumization
This includes Pantaloons, a leading fashion retailer that is undergoing a strategic shift toward premiumization, moving away from value-led price competition toward a more fashion-forward, aspirational proposition. The brand caters to men, women (Western and ethnic), and kids. A youth fashion format (OWND!) that offers trendy merchandise.
Expanding the Ethnic Wear Footprint
The company has built a comprehensive ethnic wear portfolio, now generating over ₹2,200 Cr in annual revenue. This includes the Premium Ethnic Wear brand, which comprises Tasva and TCNS and houses popular women’s brands such as W, Aurelia, Wishful, Elleven, and Folk Song. In addition, TMRW is ABFRL’s digital-first brand.
The ABFRL store network comprises 1,226 stores, with 50 new stores opened during Q3FY26. This includes the Pantaloons network comprising 406 stores, ethnic (665+), luxury (50), and TMRW (90+) stores. The company plans to open 20 large-format Pantaloons stores in FY27 in Tier 1 and metro cities.
The brand will continue its premiumization strategy, which has shown early “green shoots” with improved sell-through rates and a shift toward a younger customer profile. The company plans to open 40-50 new OWND! stores in the coming year. Management has signaled the end of this consolidation phase. Now it plans to add 50-60 new TCNS stores next year.
Path Toward Core Business Profitability
From a financial perspective, revenue grew 8% year-over-year to ₹2,374 crore in Q3FY26. EBITDA increased 13% to ₹370 crore, while margin expanded 70 bps to 15.6%. The company reported a net loss of ₹137 crore. This includes a one-time exceptional item of ₹28 crore related to the legal impact of the new labor code. The net loss otherwise stood at ₹115 crore.
Segment-Mix
Pantaloons’ revenue declined 2% to ₹1,276 crore, accounting for 53.7% of total revenue. The decline was optical, driven by the shift of festivals to Q2 and the postponement of the End of Season Sale to Q4. Adjusted for these shifts, Like-to-Like (LTL) growth was 3%. Management is targeting mid-to-high single-digit Like-to-Like growth and double-digit overall growth over the next two years.
The Path to Breakeven: TMRW and Ethnic Portfolios
Ethnic business grew by 20%, luxury (+27%), and TMRW (+29%). Ethnic business has halved its losses on a YTD basis and aims to breakeven by FY27. TMRW is currently operating at 12-15% losses relative to revenue. Management expects the portfolio to achieve breakeven by FY29.
The core business (ABFRL excluding TMRW) has reached a breakeven level on a pre-Ind AS EBITDA basis for the 9MFY26. Management expects this core portfolio to generate pre-Ind AS profits from FY27, with profitability projected to increase sharply over the next 2-3 years. ABFRL held a net cash of ₹600 crore and gross cash of ₹2,100 crore as of Q3FY26.
#3 V2 Retail: The Small-Town Expansion Powerhouse
V2 Retail primarily operates in the value fashion market, with a primary focus on Tier II and Tier III cities. As of February 4, 2026, the company operates a chain of 304 V2 Retail stores across 225+ cities in 25 states, covering approximately 3.2 million square feet of retail space. In the 9MFY26 alone, the company achieved a net addition of 105 stores.
Aggressive Small-Town Expansion
The company focuses on high-performing clusters; as of December 31, 2025, the highest presence states include Uttar Pradesh (50 stores), Bihar (48), Odisha (32), Madhya Pradesh (22), and Jharkhand (20). New and growing markets include Karnataka (20), Assam (19), and West Bengal (13).
The company plans to continue its aggressive expansion, targeting the addition of approximately 150 new stores next year.
Hyper-Growth in Volume and Revenue
The company’s revenue in Q3FY26 increased 57% year over year to ₹929 crore, driven by 48% volume growth. Reported SSSG (2%) and normalized SSSG stood at 12.8%. Its average selling price (ASP) for the quarter was ₹363 (up from ₹343 YoY), while the average bill value (ABV) stood at ₹964 (up from ₹924 YoY).
Operational Leverage and Margin Strategy
In the revenue mix for Q3FY26, men’s apparel accounted for 41%, followed by women’s apparel (27%), children’s apparel, and lifestyle. Gross margin stood at 32.4% (up from 32.1% in Q3 FY25), while EBITDA margin was reported at 18.7%. With continued strong revenue growth, PAT increased 99% to ₹102 crore.
Looking ahead, management has guided for at least 50% revenue growth for next year, with SSSG of 8-10%. V2 Retail plans to maintain gross margins of 28-29% and strategically pass on benefits to customers to drive volume growth. The focus will be on increasing EBITDA margins through operating leverage rather than increasing gross margins.
The Valuation Gap: Peer Comparison
In terms of return ratios, V2 Retail boasts a strong return ratio including Return on Capital Employed (ROCE) and Return on Equity (ROE). ABFRL is currently loss-making. In terms of valuations, Vishal is trading at a premium to the industry multiple, while ABFRL is also trading at the same level, and V2 Retail is trading at a premium to the industry median.
| Peer Comparison (X) | |||||
| Company | EV/EBITDA | 3Y Median EV/EBITDA | Industry Median EV/EBITDA | ROCE (%) | ROE (%) |
| Vishal Mega Mart | 30.4 | 39.9 (1Y) | 12.9 | 13.1 | 10.1 |
| ABFRL | 14.5 | 14.2 | 14.1 | NA | NA |
| V2 Retail | 20.8 | 21.2 | 14.1 | 16.9 | 23.3 |
| source: screener.in | |||||
India’s expanding economy and rising aspirations, especially in Tier II and III cities, are accelerating demand for value retail. Vishal Mega Mart, ABFRL, and V2 Retail are leveraging this shift through store expansion, private labels, premiumization, and operating leverage.
Vishal focuses on scale and margin control, ABFRL is restructuring for profitability, and V2 is driving high growth in smaller towns. Strong revenue momentum and aggressive expansion position them to benefit from India’s evolving consumption story. These three can be put on a watch list to track how they execute.
Disclaimer:
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data was not available have we used an alternate but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
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