V2 Retail Ltd: An Overview

V2 Retail Ltd, a dynamic presence in the retail sector, offers a vast variety of fashionable apparels and lifestyle products. Originally incorporated as Vishal Megamart Limited in 2001, the company’s brand evolved into V2 Retail Ltd in 2011 following a few operational setbacks. Despite these early hiccups, V2 Retail has managed to establish a firm foothold in India’s thriving retail industry.

Main Business Segments

• Apparels (94%): The company’s product portfolio is dominated by Men’s Wear (40%), Ladies’ Wear (25%), and Kids’ Wear (29%).
• Non-apparels- Lifestyle Products (7%): Lifestyle products like Deodorants, wallets, sunglasses, ladies’ purses, etc. form a smaller yet significant part of their offerings.

Distribution Network

V2 Retail expanded its presence during FY22, adding 10 new stores to its network. As of March 2023, it operates about 100 stores across 16 states and over 85 cities. Their retail area extends over 10 lac Sq. Ft., signaling the company’s strong presence in Northern & Eastern India. Notably, they cater mainly to the ‘neo middle class’ and ‘middle class’ group in Tier 2 and Tier 3 cities.

E-Commerce Initiatives

In an effort to expand its reach and appeal to digital shoppers, V2 Retail launched its e-commerce portal, V2 Kart. Besides, they’ve secured partnerships with prominent e-commerce platforms such as Amazon and Myntra.

Private Labels

V2 Retail has seen an uptick in the revenue share of its private labels, going from 2% in FY16 to 38% in FY22. They boast several in-house brands like One Human, Godspeed, No war, and Honey Brats. Further solidifying their private label presence, they’ve established an in-house manufacturing unit under “V2 Smart Manufacturing.”

Future Plans

V2 Retail plans to open 25 new stores in FY23, with an expected Capex requirement of Rs 30-35 crores. The focus is firmly set on augmenting the contribution of margin-accretive private labels to the company’s revenue.

Quarterly Results

For Q1 2023, V2 Retail Ltd reported:

• Sales: ₹193.43 Crore
• Expenses: ₹180.85 Crore
• Operating Profit: ₹12.58 Crore
• Other Income: ₹2.04 Crore
• Interest: ₹9.19 Crore
• Depreciation: ₹16.48 Crore
• Profit Before Tax: -₹11.05 Crore
• Tax: 26.06%
• Net Profit: -₹8.17 Crore
• EPS: -₹2.38

Key Financial Statistics (as of Mar 2023)

• Market Cap: ₹358 Crore
• Current Price: ₹104
• Book Value: ₹71.9
• ROCE: 3.23%
• ROE: -5.71%

Sales and Profit Growth

V2 Retail Ltd has shown consistent growth in sales over the years. From March 2012 to March 2023, sales grew from ₹42 Crores to ₹839 Crores. Despite this robust sales growth, profits have been fluctuating with a notable net loss reported in Mar 2023.

Future Outlook

V2 Retail plans to open 25 new stores in FY23, which will require an expected Capex of Rs 30-35 crores. The company is focusing on margin-accretive private labels to increase its share in the company’s revenue.

Investor Note

While V2 Retail shows strong sales growth, its profitability needs closer examination. The company has been running at a loss as of Q1 2023, which potential investors need to consider. However, the company’s strong presence in the retail sector and plans for expansion provide potential growth opportunities. As always, investment decisions should be made based on individual financial goals and risk tolerance.

Final Thoughts

V2 Retail has demonstrated its resilience and adaptability in the ever-evolving retail industry. With an expanding network, an emphasis on private labels, and the adaptation of e-commerce, V2 Retail Ltd appears poised for continued growth in the coming years. However, as with all investments, potential investors should consider their individual financial goals and risk tolerance before deciding to invest.