Potential multibagger stocks from high growth industry:analaysis and insights

company : NSE: V2RETAIL

compare this company with any retail and supermarket.

Detailed Summary of V2 Retail Limited

Company Overview
V2 Retail Limited is a value retail chain primarily focused on catering to the neo-middle-class and middle-class populations in India. Incorporated in 2001 under the leadership of Mr. Ram Chandra Agarwal, the company aims to provide affordable fashion and general merchandise to Tier-II and Tier-III cities. As of Q1 FY25, the company operates 127 stores across 17 states and over 100 cities, with a total retail area of ~13.64 lakh sq. ft.

Key Highlights for Q1 FY25

• Revenue: ₹415.0 crore, showing a 57% YoY growth.
• Gross Profit: ₹120.2 crore, up by 49% YoY.
• EBITDA: ₹55.5 crore, a 56% increase YoY.
• PAT: ₹16.3 crore, up by 162% YoY.

Operational Insights

• Same Store Sales Growth (SSG): 37% in Q1 FY25, reflecting strong demand across existing stores.
• Volume Growth: 55% YoY.
• Average Selling Price (ASP): ₹260 in Q1 FY25, slightly higher than ₹257 in Q1 FY24.
• Average Bill Value (ABV): ₹824, up from ₹807 in Q1 FY24.
• Sales Per Square Foot (PSF): ₹1,059 per month, a significant improvement from ₹798 in Q1 FY24.

Retail Expansion

V2 Retail opened 10 new stores in Q1 FY25, bringing the total store count to 127, covering 13.64 lakh sq. ft. The company has a strong presence in Tier-II and Tier-III cities, focusing on fashion and lifestyle products for men, women, and children.

Financial Performance (Q1 FY25 - Consolidated)

• Revenue Growth: Increased from ₹263.6 crore to ₹415.0 crore YoY, demonstrating a robust recovery.
• Gross Profit Margin: 29.0%, a slight decrease from 30.6% in Q1 FY24 but still healthy given the volume growth.
• EBITDA Margin: 13.4%, remaining stable compared to the previous quarter.
• PAT Margin: Improved to 3.9%, indicating better operational efficiency and cost control.

Division-Wise Sales

• Men’s Wear: 38%
• Ladies’ Wear: 27%
• Kids’ Wear: 25%
• Lifestyle Products: 9%

Business Strategy

V2 Retail focuses on offering affordable, high-quality fashion products. It has a unique business model that involves both in-house product design and manufacturing, ensuring tight control over quality and inventory management. The company operates a centralized warehouse in Gurgaon, replenishing store inventory weekly.

Leadership

• Mr. Ram Chandra Agarwal: Chairman and Managing Director, pioneer in value retailing in India.
• Mr. Akash Agarwal: Whole Time Director, responsible for e-commerce, procurement, and finance.
• Ms. Uma Agarwal: Whole Time Director, overseeing marketing strategies.

Key Growth Drivers

1. Store Expansion: Continued focus on expanding store count in Tier-II and Tier-III cities.
2. Product Offering: Strong focus on affordable fashion catering to the middle-class population.
3. Cost Management: Improvements in operational efficiency, EBITDA margins, and effective inventory management have contributed to profitability.
4. Market Trends: With rising demand for fashion in smaller cities, V2 Retail is well-positioned to capture this growing segment.

Challenges

• Cost of Goods Sold (COGS): Increased significantly due to rising material costs, which slightly impacted gross margins.
• Expansion Risks: Rapid store expansion may pose operational challenges, such as managing inventory efficiently across various locations.

Conclusion

V2 Retail has shown impressive growth in revenue, profits, and operational metrics in Q1 FY25, backed by strong same-store sales growth and successful retail expansion. The company's focus on Tier-II and Tier-III cities positions it well to capitalize on the growing demand for affordable fashion in India. While there are risks related to cost pressures, the company's robust operational model and leadership team appear to be managing these effectively