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Investment Rationale

• Resilient Performance amid Challenging Environment: V-Mart delivered ~13% YoY revenue growth in Q1FY26, driven by 14% growth in the core business and 12% in Unlimited, supported by strong wedding season demand and higher footfalls (+11% YoY; second-highest ever). Conversion improved 100bps YoY to 48%, marking the best performance in six quarters. Despite regional disruptions, management has guided for high single-digit SSSG over the next three quarters, aided by sharper pricing, youth-centric assortments, and festive demand. We expect mid-single digit SSSG for FY26, with value retailers like V-Mart positioned to benefit from rural spending recovery and steady footfall momentum.
• Reduction in Limeroad Losses Continues: V-Mart’s acquired platform, LimeRoad, continued to narrow losses, with Q1FY26 losses down 56% YoY. Management expects further moderation in the coming quarters, easing the earlier drag on profitability.
• New Store Addition Remains Intact: V-Mart added 13 stores in Q1FY26, taking the total to 510 outlets. Management guided for ~12- 15% net retail area growth in FY26, with ~65 store additions expected, factoring in routine closures. Store churn has largely normalised after major rationalisation over the past two years.
• Redefining Affordable Fast-tracking Fashion for Gen-Z: V-Mart’s revamped design team and strategy shifts are driving trendy, affordable styles, fueling growth and productivity gains.
• Outlook: V-Mart is well-placed to benefit from rural recovery and market share gains from unorganised players. Strong footfalls, disciplined cost control, and steady store expansion should aid performance, while the recent announcement on GST rate cut is likely to spur consumption and boost discretionary spending.

Valuation & Analyst recommendation

• Considering the company’s promising growth outlook, we expect Revenue/EBITDA to grow at a CAGR of 18%/37% CAGR over FY24-27E. We recommend a BUY rating on the stock with a TP of Rs 845/share, implying an upside of 10% from the CMP.

OBJECTIVE

Axis Punch is designed to generate solid return in short to medium term based on High Conviction Stock Ideas for both investors and traders. This fundamental medium-term product targets return of 10% plus with an investment horizon of 3 to 6 months. Recommendations under Axis Punch are driven by various business and economic events, company valuations, market direction, or a mix of these factors.

Axis PUNCH is strong research based idea based on

Events Based: Our recommendations are based on the following critical factors, providing a comprehensive approach to medium-term investment opportunities:

• Company-Specific Events: Recommendations consider significant company-specific events such as new orders, product launches, acquisitions, management changes, and the commissioning of new plants.
• Commodity Price Fluctuations: We analyze changes in commodity prices, including metals, cement, chemicals, and pharmaceutical materials.
• Macro-Economic Events: Key macroeconomic events such as RBI Monetary Policy, US Fed decisions, inflation rates, GDP figures, budget announcements, and changes in government policies are factored into our recommendations.
• Sector Developments: Material developments within sectors, including monthly production and sales numbers in industries like Auto, Cement, and Steel, as well as competitive landscape changes due to business actions or new entrants/exits, are considered.
• Earnings Surprises: We identify companies expected to report better-than-anticipated earnings in upcoming quarters.
• Corporate Actions: Corporate actions such as mergers and acquisitions, capital raising programs, and regulatory announcements that impact a company or its industry form crucial elements for our recommendations.
• Strategic Insights: Benefit from insights based on a blend of critical business events, economic trends, and thorough company valuations.
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• Medium-term Horizon: Enjoy the medium-term investment strategy, perfectly suited for those looking to optimize returns over 3 to 6 months.

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