V2 Retail may target more than 100 new stores in FY26

“We are well on track, so I think we’ve already opened 26 stores this first quarter,” said Akash Agarwal, chief executive of V2 Retail, which operated 189 stores across 20 states as of March 2025, in an interview with Mint. It had 117 stores as of March 2024. 

“Looking at the performance, we might increase that guidance,” he added, noting that a final decision is still under discussion.

The expansion marks V2 Retail’s fastest growth phase since its inception in 2011. But despite the aggressive rollout, profitability remains central to the company’s strategy, said Agarwal, who took over as CEO on 27 May 2025.

“All our stores are Ebitda positive, and now we are at least 40% better in first profit sales—new store’s revenue before it turns profitable at the Ebitda level—compared to competitors,” he said. Ebitda is short for earnings before interest, taxes, depreciation, and amortization, a key measure of a company’s operating profitability.

In 2024-25, it posted a consolidated net profit of ₹72 crore, up 159% from ₹27.8 crore in 2023-24. Revenue rose 62% to ₹1,884.5 crore, and Ebitda stood at ₹257.8 crore, with margins improving to 13.7%. Even while maintaining an Ebitda margin of 8%, the company is generating a return on equity of over 25%, which Agarwal described as “a very good return for investors”.

Edge over the competition

V2 targets low- and middle-income consumers in underpenetrated markets and is aiming for 40-50% annual revenue growth. “Our internal targets are to increase revenue by at least 50% every year,” Agarwal said.

Same-store sales have grown nearly 30% year-on-year for two years straight, while full-price (undiscounted price) sales accounted for 89% of total sales in 2024-25, up from 87% a year ago.

To sustain this momentum, the retailer has tightened sourcing and inventory controls. Over the last two years, the share of stock older than 12 months has dropped from 25% to under 5%.

Its competitors include V-Mart Retail Ltd, Style Baazar (Baazar Style Retail Ltd), and DMart (Avenue Supermarts Ltd). While DMart primarily focuses on food and groceries, it has been expanding into general merchandise and apparel.

V2 Retail has established a stronghold in eastern India, with 38 stores in Bihar, 35 in Uttar Pradesh, and 26 in Odisha. Together, these three states account for over 52% of its total store network.

In fact, no other value retailer has a deeper penetration across eastern markets than V2 Retail, positioning it as the most regionally dominant player in that geography.

Among competitors, DMart’s presence is heavily concentrated in western and southern India, with 116 stores in Maharashtra, 66 in Gujarat, and 45 in Telangana—the three states alone making up nearly 55% of its 415 stores.

V-Mart dominates the North and the East, with 155 stores in Uttar Pradesh, 70 in Bihar, and 30 in Tamil Nadu, collectively accounting for over 51% of its 497-store network.

Style Baazar, a regional value retailer with 214 stores, is also concentrated in the East, with 17 stores in Bihar and 28 in Odisha.

Quick-commerce threat

While newer fashion startups experiment with quick commerce, V2 Retail is taking a cautious approach. “At our average selling price of ₹300, quick commerce doesn’t work. The unit economics simply don’t add up,” Agarwal said.

The company is exploring a hyperlocal delivery model using store inventory within a 15-30 kilometre radius, but only if the tech is robust enough to ensure a seamless customer experience.

But quick commerce players such as Blinkit, Zepto, and Swiggy’s Instamart are rapidly expanding into tier-2 and tier-3 cities, many of which overlap with V2 Retail’s core markets.

A 24 June Kotak Institutional Equities report noted that these platforms are now active in over 100 cities where traditional retailers like DMart don’t have a presence. In Uttar Pradesh, quick commerce platforms are already in more than 19 cities. In Odisha, they’ve entered Bhubaneswar and Cuttack. Bihar, where V2 Retail has the highest number of stores, remains relatively less penetrated.

“V2 Retail is mostly present in the eastern region of the country, where population density and consumer preferences are different. They’ve been able to achieve scale and profitability in these markets,” said Pratik Prajapati, equity research analyst at stockbroker Ambit Capital Pvt. Ltd. “Quick-commerce penetration is still minimal in these places, so I don’t think competition from these players will affect it in the near term.”

Prajapati added that while aggressive expansion may temporarily impact margins, the stores added in 2023-24 and 2024-25 are likely to mature in the coming fiscal year. “We can expect signs of those stores becoming more profitable, and overall profit improvement can be seen,” he said.

On the digital front, he noted: “E-commerce will provide similar margins, so not having an e-commerce channel won’t make much difference.”

V2 Retail, in its current form, was launched in 2011 by Ram Chandra Agarwal as a comeback venture following the collapse of Vishal Mega Mart.

Agarwal founded Vishal Mega Mart in 2001. The company grew rapidly through the 2000s and went public in 2007. However, by 2009, it was burdened with a debt of over ₹730 crore and entered corporate debt restructuring.

Its assets, including the Vishal brand, were sold to financial services and infrastructure conglomerate Shriram Group and global private equity firm TPG Capital for ₹70 crore.

Agarwal later repurposed the remaining listed entity and rebranded it as V2 Retail in 2011, focusing on value fashion in tier-2 and tier-3 cities. Since then, the company has scaled up aggressively.

Promoters’ holdings in the company stand at 54.24%, with public shareholders owning the remaining 45.76%. Institutional investors had yet to show meaningful interest.

Agarwal acknowledged the concern during the Q4FY25 earnings call, noting that institutional appetite typically builds once companies cross a certain scale. “FIIs (foreign institutional investors) usually come in at a $10 million ticket size. We’re getting there,” he said, adding that institutional interest is gradually picking up as the company scales and tightens its backend systems.