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V-Mart: Surpasses pre-Covid levels in Q2FY22

News: V-Mart’s revenue for Q2FY22 grew 93% YoY to Rs.338 crore on a low base. Gross margins improved 190 bps YoY to 30.7% probably due to better product mix and lower discounting. Further, positive operating leverage led to company reporting EBITDA margin improvement of 250 bps YoY to 6.1% (I-direct estimate: 2.3%). Subsequently, the company reported EBITDA of Rs.21.0 crore in Q2FY22 (Q1FY22: (-) Rs.2 crore, I-direct estimate: Rs.6.9 crore). Consequently, owing to better operational performance, PAT loss was restricted to Rs.14.1 crore (Q1FY22: (-) Rs.28.7 crore, I-direct estimate: (-) Rs.28.0 crore).

Views: VMart’s revenue trajectory exhibited strong recovery and crossed the pre-Covid revenue with growth of 7% over Q2FY20 revenue. The company’s operational store days were at more than 80% for the quarter, which aided the revenue recovery. Also the company’s store expansion trajectory has gained pace and the company had added 12 new stores in Q2FY22 and further added seven new stores in October taking the total count to 375 stores. We like V-Mart as a structural long term story to play the unorganised to modern retail shift