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Informist, Thursday, Aug. 14, 2025

By Avishek Rakshit and Simran Rede

KOLKATA/MUMBAI – Vishal Mega Mart Ltd. has consciously decided to keep its gross margins flat in 2025-26 (Apr-Mar) and any gains from the rise in gross margin will be invested back into the company to improve the "quality of the business," Managing Director and Chief Executive Officer Gunender Kapur said Thursday. "But our EBITDA margin will continue to improve, basically, at the back of operating leverage," Kapur told analysts in a conference call after declaring its June quarter results Wednesday.

During the June quarter, Vishal Mega Mart's gross margins improved marginally to 28.4% as compared to 28.2% in the year-ago quarter and the earnings before interest, tax, depreciation, and amortisation, or EBITDA, margin improved to 14.6% in the June quarter from 14.1% in the corresponding quarter of the last financial year. Kapur said the operating leverage and the slight improvement in the gross margins led to the marginal increase in EBITDA.

Kapur said as the company is increasing its store count and store rentals come for renewal with the landowners, rents and wages are expected to remain inflationary at 5% and 5-7%, respectively, going ahead.

"Beyond that, commodity prices are more stable at the moment and it is very difficult to predict how they will pan out given the global context," Kapur said. 

In line with the consumer goods companies and fashion retailers, Kapur said that an improvement in demand conditions on a trailing basis was noticed in Apr-Jun. "The expectation continues that the consumer demand will improve after the changes which were announced on income tax (in Budget)," he said. 

During the June quarter, Vishal Mega Mart opened a new store in Gujarat, taking the total count to two in the state. In Maharashtra as well, it opened a new store in Pune. "I can tell you that the early signs are very encouraging. And based on that, we have actually now started looking for incremental properties in both these states," the top company executive said. 

As of Jun. 30, Vishal Mega Mart had a total of 717 stores across 472 cities with a retail area of 12.4 million square feet.

The company is also focussing on expanding its small-format stores which currently operate in Uttar Pradesh and Haryana. These stores are typically half the average size of regular stores, Kapur said. However, he did not specify the average size of such a store. 

"We now have six stores of the smaller format, which are operational in Uttar Pradesh and Haryana. And again, I'm happy to report that both in terms of revenue and the financial outcomes, they are as per target. So, in the coming quarters, we wish to accelerate the rollout of the smaller format stores now," he said.

The category mix in the small-format stores is similar to the large-format ones, but the contribution of products at lower price points to the total sales is higher in smaller stores as compared to the large-format stores, Kapur said. 

At 1338 IST, shares of Vishal Mega Mart traded 1.5% up at INR 146.29 on the National Stock Exchange.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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