V-Mart Retail (VMART) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 revenue grew 20% year-on-year, with strong like-to-like sales growth and improved profitability metrics; store network expanded to 467 with 21 new stores opened.

• EBITDA margin improved to 5.8% in Q2, with significant reduction in LimeRoad losses and strong customer loyalty (repeat sales at 70%, NPS above 60%).

• Value retail segment outperformed, especially among youth and rural consumers, while premium brands faced challenges.

• Unaudited financial results for Q2 and H1 FY2024-25 were approved on October 29, 2024, covering performance up to September 30, 2024.

• Store expansion guidance for FY25 remains at 55-60 new stores, with a focus on 12-13% area growth annually.

Financial highlights

• Q2 FY25 revenue reached ₹6,610 million, up 20% year-on-year; YTD revenue at ₹14,471 million, up 18%.

• Q2 EBITDA grew 57x year-on-year to ₹386 million (5.8% margin); YTD EBITDA up 159% to ₹1,376 million (9.5% margin).

• Q2 PAT loss reduced to ₹-565 million from ₹-641 million; YTD PAT loss narrowed to ₹-444 million from ₹-861 million.

• Gross margin decreased by 1% year-on-year due to a 53% drop in LimeRoad commission revenue, but excluding LimeRoad, offline gross margin improved by 0.6% year-on-year.

• Total expenses decreased by 3% year-on-year, mainly due to a 74% reduction in LimeRoad marketing expenses and lower offline marketing costs.

Outlook and guidance

• Store expansion guidance maintained at 55-60 new stores for FY25, with a focus on operational efficiency and further reduction in LimeRoad losses.

• Management expects gross margins for offline business to remain similar to last year, with continued focus on volume-driven growth.

• Inventory days improved by 16% to 111 days, supporting working capital efficiency.

• LimeRoad losses expected to keep reducing, with a long-term goal of minimal loss funding or marginal profitability.

• Management aspires to reach pre-COVID profitability levels (8% EBITDA margin, 5% PAT margin pre-Ind AS) within three years.