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V-Mart Retail: Good Performance in a Tough Environment - Views on News from Equitymaster
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  • Feb 23, 2017 - V-Mart Retail: Good Performance in a Tough Environment

V-Mart Retail: Good Performance in a Tough Environment
Feb 23, 2017

V-Mart Retail Ltd declared results for the quarter ended December 2016. The company reported a revenue growth of 23.3% YoY during the quarter, while profits came in higher by 81.2% YoY.

Performance Summary
  • Revenues grew by 23.3% YoY during the quarter as number of stores increased to 136.
  • Same store sales growth (apparel) grew by 17% YoY during the quarter. While, same store volume growth grew by 13% YoY during the quarter.
  • The average transaction size (overall billing for a customer) during the quarter stood at Rs 824 as compared to Rs 768 in the same quarter last year. Average selling prices moved upwards to Rs 255 as compared to Rs 238 a year ago. Fashion sales contributed to 94% of sales while kirana sales contributed 6%. The proportion of fashion sales will continue to rise going forward as the new stores won't have a section for kirana.
  • Footfalls grew by 24.5% YoY to 7.1 million during the quarter. However, the conversation rate fell by 7.4% to 58.5% during the quarter on the back of lower disposable income in the hands of the people.
  • Net profit margins improved 8.3% from 5.7% in the same quarter last year. This improvement can be mainly attributed to the shrinkage which was accounted at one go last year same quarter. The company has spread shrinkage costs throughout the year. Also, procurement from suppliers at competitive rates helped improve margins.
  • Demonetization proved to be a blessing in disguise for the company due to disruption amongst the unorganized retail players. 90% of V-mart's sales used to be cash payments prior to demonetization with 10% through card payments. This changed to 67% card and 33% cash during demonetization and currently stands at 38% card and 62% cash.

    Financial Performance Snapshot
    (Rs m) 3QFY16 3QFY17 Change 9mFY16 9mFY17 Change
    Net sales 2,651 3,269 23.3% 6,314 7,499 18.8%
    Expenditure 2,349 2,786 18.6% 5,745 6,807 18.5%
    Operating profit (EBITDA) 302 483 59.9% 569 693 21.7%
    EBITDA margin 11.4% 14.8% 9.0% 9.2%
    Other income 2.2 2.2 2.8% 10.0 23.2 131.5%
    Depreciation 62 57 -7.6% 142 163 14.6%
    Interest 13 11 -15.1% 24 27 10.8%
    Profit before tax 230 417 1 413 526 1
    Tax 80 145 82.6% 141 181 28.0%
    Effective tax rate 34.6% 34.8% 34.2% 34.4%
    Net profit 150 272 81.2% 272 345 27.2%
    Net profit margin 5.7% 8.3% 4.3% 4.6%
    No of shares (m) 18.1
    Diluted EPS (Rs)* 19.4
    P/E (times)* 36.2

    *trailing twelve month earnings excluding exceptional items

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