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V-Mart Statewise Distribution in India

This document discusses V-Mart's store operating metrics and economics. It notes that V-Mart has established profitable store economics, with new stores breaking even within the first year and a payback period of 2.5-3 years on average. It provides details on V-Mart's per store operating metrics, including revenue per square foot of Rs. 8,500, store-level EBITDA margin of 14%, EBIT of Rs. 1,050, capex per square foot of Rs. 1,400, and return on capital employed of 41%. The document summarizes that despite lower average selling prices, V-Mart generates healthy throughput per store through better inventory turnover.

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Hareram Kumar
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74 views1 page

V-Mart Statewise Distribution in India

This document discusses V-Mart's store operating metrics and economics. It notes that V-Mart has established profitable store economics, with new stores breaking even within the first year and a payback period of 2.5-3 years on average. It provides details on V-Mart's per store operating metrics, including revenue per square foot of Rs. 8,500, store-level EBITDA margin of 14%, EBIT of Rs. 1,050, capex per square foot of Rs. 1,400, and return on capital employed of 41%. The document summarizes that despite lower average selling prices, V-Mart generates healthy throughput per store through better inventory turnover.

Uploaded by

Hareram Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Initiating Coverage |V-Mart ICICI Direct Research

Exhibit 9: UP, Bihar comprise most stores

Source: Company, ICICI Direct Research

Exhibit 10: Number of stores, total square feet trend


300 2.2 2.5

250 1.8 2.0


266
200 1.4
1.2 214 1.5
in million

150 1.0
0.9 171
0.7 141 1.0
100 0.6 123
108
50 89 0.5
69
0 0.0
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

No of stores Total sq ft

Source: Company, ICICI Direct Research

Favourable store operating metrics Per store operating metrics


Per store operating Metrics
V-Mart has built a scalable and efficient business model to grow and
expand in a calibrated manner for several years to come. Over the years, it Revenue/sq ft (|) 8500
has established profitable store economics with new stores breaking even Store level EBITDA margin 14%
in the first year of their operations and having payback period of two-and- EBITDA (|) 1190
a-half to three years, on an average. Since the products are priced at
Depreciation 140
aggressive price points, gross margins are among the lowest in the industry
(Exhibit: 13) However, the company makes up for the same through tight EBIT 1050
cost control measures. Also, given the fact that V-Mart operates in non-tier-
1 cites, lease rental outflows are lowest among other apparel retailers Capex/sq ft (|) 1400
(Exhibit: 15). The company operates mid-sized stores ranging between
Working capital days 50
8000 and 9000 sq ft, with lower capex requirements (| 1400/sq ft vs. peers:
| 2500-3000/sq ft). With high asset turn (A/TO) of ~6x and 14% EBITDA Working capital (|) 1164
margins at the store level (4-5% corporate level expenses) the company Total Capital employed 2564
generates healthy pre-tax RoIC of ~40% at the store level. Despite ASPs
being substantially lower than other players, V-Mart generates healthy
RoCE 41%
throughput per store on account of better inventory churns. The company
generates revenue/sq. ft. of | 8000-8500. Payback Period 2.5-3 years

ICICI Securities |Retail Research 5

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