V2 Retail store expansion and same-store sales support robust FY27 growth

Investment View and Target Price

In its August 28, 2026 Axis PUNCH report, Axis Securities recommends BUY on V2 Retail Ltd., citing the company’s successful turnaround, strong operating performance, aggressive store rollout and improving growth visibility.

The broker’s Rs 246 target price implies 10 per cent upside from the Rs 223 CMP, with an indicated investment horizon of three to six months. Axis Securities also sees a margin of safety following the sharp correction in the share price.

Business Positioning and Growth Drivers

V2 Retail operates in India’s value-fashion segment, offering affordable apparel and accessories primarily in Tier 2 and Tier 3 cities, where organised retail penetration remains relatively low. Axis Securities believes V2 Retail has executed strongly relative to peers through cost-efficient operations, calibrated expansion and a focus on fashionable yet economical merchandise.

The broker views the company’s expanding store base and better performance from existing stores as the central drivers of revenue growth. Key growth drivers include:

• Expansion of the store network across Tier 2 and Tier 3 markets.
• Improving performance from existing stores through stronger same-store sales growth.
• Better merchandising, sharper assortment planning and faster inventory replenishment.
• Cost-efficient operations and calibrated expansion.

Q1 FY27 Operating Performance

Actual Q1 FY27 revenue rose 58 per cent year-on-year to Rs 997 crore. Same-store sales growth was 7.5 per cent, demonstrating continued traction across the existing network and reducing dependence on growth solely from new outlets.

The report attributes improved sell-through and lower markdowns to better merchandising, sharper assortment planning and faster inventory replenishment. V2 Retail added 57 stores during Q1 FY27, taking its network to 381 stores.

Store Expansion and Revenue Visibility

Management plans to add 170 to 200 stores in FY27 and has a long-term ambition of 2,500 stores. Expansion remains focused on Tier 2 and Tier 3 markets.

Management expects to finance the rollout through internal accruals and available cash, including proceeds from the Rs 400 crore qualified institutional placement. Management is targeting 8 to 10 per cent same-store sales growth in FY27. Axis Securities considers this combination of same-store sales growth and new stores to provide strong revenue visibility.

Margins and Profitability Outlook

Q1 FY27 EBITDA increased about 60 per cent year-on-year to Rs 139.5 crore, while EBITDA margin improved by about 20 basis points to 14 per cent despite rapid network expansion.

However, gross margin declined to about 28.6 per cent from 29.5 per cent, partly because of Adhik Maas and a lower full-price sales mix. Management expects FY27 EBITDA margin to remain broadly stable as operating efficiencies offset incremental expansion costs.

Axis Securities expects margin expansion to be gradual, with store maturation, higher sales density and operating leverage offering medium-term profitability upside.

Financial Forecasts

Axis Securities forecasts revenue and EBITDA CAGRs of 51 per cent and 55 per cent, respectively, over FY25 to FY28E, with EBITDA margins in the 14 to 15 per cent range in the near term.

The target is supported by the broker’s favourable growth outlook rather than a separately disclosed valuation methodology.

Key Risks

• Competition from online players.
• Lower disposable income.
• Rising competitive intensity.