- 28 Feb 2022
- ICICIdirect Research
V-Mart hikes prices across product categoriesVMART - 2032 Change: -14.35 (-0.70 %)
News: As per ETMarkets.com, V-Mart has taken a price hike of about 8-10% across various categories. The price hike has been done to neutralise the price increase in input cost (cotton yarn), which have increased by nearly 50% over the last one year.
Views: Post price hikes, V-mart has not seen any major drop in volume but, going forward, if it is forced to take more price hikes (due to input cost inflation or any increase in GST) it can negatively impact volumes in the short-term till consumers get used to the new price level. On the V-Mart margin front (excluding Unlimited stores), the company believes it will be able to maintain margins, going ahead, by passing any cost inflation to consumers. While the Covid and post Covid recovery has been strong in all markets, the company is seeing the recovery in tier II, tier III towns to be slightly slower due to high inflation, low wage growth among other factors. However, V-Mart is hopeful that with a good harvest season and normalisation of the situation post Covid, the market situation could return to normal. Also, the company expects to improve its south India performance by 20-25% in terms of sales throughput, which should aid in improving the EBITDA margin of its southern operations (Unlimited stores acquired from Arvind Fashions).