Ladies and gentlemen, good day and welcome to the V2 Retail Limited Q1 FY 2026 Conference Call hosted by Marathon Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this call is being recorded. Before we begin, a brief disclaimer: the presentation which V2 Retail Limited has uploaded on the Stock Exchange and our website, including the discussion during this call, contains or may contain forward-looking statements concerning V2 Retail Limited's business perspective and profitability with respect to services and uncertainty, and the actual results could materially differ from those in such forward-looking statements. With this, I now hand the conference over to Mr. Akash Agarwal, Director and CEO of V2 Retail Limited. Thank you, and over to you, Mr. Akash. Good afternoon, everyone, and a very warm welcome to our Q1 FY 2026 earnings conference call. We trust you had a chance to review our results. The earnings presentation and press release are available on the stock exchanges and our company's website. As we begin FY 2026, we do so with strong momentum and a clear sense of purpose. We are operating from a position of strength, backed by innovation, executional agility, and the deep trust we've built with millions of customers across the country. We are not just responding to the evolving landscape of Indian retail; we are setting the pace. Our strategy is clear and future-ready to lead the next wave of growth in India's value-setting market. Our sharp focus on customer-centricity, powered by deep data insights, agile merchandising, and a tech-enabled supply chain, continues to deliver measurable impact. We are building a business that's not only scalable but also resilient, responsive, and ahead of the curve. The sustained and accelerating customer traction we have witnessed in this quarter is a clear validation of our strategy. It reflects unwavering commitments to delivering fresh, trend-led assortments, maintaining exceptional product quality, and offering unbeatable value. This powerful combination continues to drive strong, broad-based performance across our store network and further cements our position as a market leader in India's value-fashion segment. FY 2026 is shaping up to be a landmark year for us, and we are entering it with confidence, clarity, and conviction. Let me start with some key updates. Revenue growth accelerated by 52% year-on-year to INR 632 crore. Net profit surged 51% year-on-year to INR 24.7 crore, marking a very strong earning momentum. The company opened 28 stores and closed 1 store during the first quarter, taking our total store count to 216 stores. The store addition momentum will continue as we have a very heavy pipeline of upcoming stores. Further, we've already added another 9 stores so far in this quarter, taking the total count of the stores to 225 stores. The same-store sales growth for the quarter stood at 5%, with strong double-digit growth in May and June, offset by a temporary dip in April due to the early calendar shift into the quarter four of FY 2025. On a normalized basis, the first quarter SSSG stood at 10%, reflecting sustained consumer demand and precision in assortment planning. There was a robust volume growth of 50% in the first quarter. The full-size sales contributed 92% of our total sales. We are proud to report a consistent improvement in ROE, which stood at 27.5% in the first quarter, up from 23% in FY 2025 and 10.7% in FY 2024. This sharp trajectory reflects the strength of our operating model and disciplined capital allocation. Now, consolidated performance highlights for Q1 FY 2026. As we track business performance on a pre-Ind AS basis, it would be prudent to share the highlights versus pre-Ind AS numbers. Revenue from operations stood at INR 632.2 crore, registering a 52% growth on a YoY basis. Gross margins stood at 29.4% for the first quarter of FY 2026 as compared to 28.8% in the corresponding quarter last year. The EBITDA stood at INR 52.5 crore as compared to INR 32.2 crore, registering a growth of 63% on a YoY basis. EBITDA margin improved from 7.8% to 8.3%. Profit after tax stood at a record INR 30.6 crore as compared to INR 18.9 crore in the corresponding quarter of last year, registering a growth of 62% on the YoY basis. With this, I now leave the floor open for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands up while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question comes from the line of Vishal Dudhwala from Trinetra Asset Managers. Please go ahead. Hello. Am I audible? Yes, sir, you're audible. Please go ahead. First of all, congratulations on a good set of numbers. I have covered our question. First, like in Q1 2026, you delivered 52% YoY revenue jump and saw ASP rise 17%, but P FS fell 9%. How are you calibrating your channel mix like digital versus brick-and-mortar? What specific productivity initiatives are you looking for to offset the footfall dilution from rapid store expansion? First of all, all our sales is brick-and-mortar. We don't have any online sales. The PFS dipped a bit because we opened a lot of new stores, and the new stores typically do about 25% less in per-quarterly sales than the older stores. If you look at only the old stores in quarter one, it was around INR 1,100 per quarterly PFS. Can you guide, looking out for FY 2026, what revenue share are you targeting? Revenue share from what? Like from brick-and-mortar your new store expansion for forward looking? We look at a 50% revenue growth going forward. In that, we look at an 8% to 10% SSSG, that's from the old stores, and 40% revenue growth from the newer stores. Okay, that's it from my end. Thank you. The next question comes from the line of Abhishek from AB Capital. Please go ahead. Hello. Am I audible? Yes, sir. You're audible. You're audible. Congratulations on great set of numbers. Every quarter you're following what you had guided for. The news came out that you are doing QIP. You had told, I think, in one of the interviews that you will open 100 stores and thought that you don't need any external capital. Now that you are doing QIP, can we be greedy and expect more openings beyond 100? Yeah, that's a very valid question. We have got an enabling resolution approved, and we are planning to raise money. It's not out of necessity or weakness. We're doing it from a position of strength. You know, our business has delivered one of the best quarters in this industry. I think it's a proactive move because we want to accelerate our momentum and also future-proof our growth. The value-passion market in India is going to grow for the next decade. We believe the next three to five years are critical to capture this proportionate market share. It will help us be debt-free. It will help us invest more in making our model stronger. Yes, it will help us accelerate our future growth trajectory also. Okay. You had told us this year you will be mostly PAT positive in all quarters. Do you think you still hold that view? Yes, I think we should be PAT positive in all the quarters. Okay. I just wanted to know, how is the competitive intensity on the ground? As in, are you finding it difficult to find newer geographies to open fresh stores? Competition has become the new reality. We look at it as an external factor that is out of our control. Of course, a lot of retailers are opening a lot of stores. Being a Tier 2, Tier 3, being our main target market, there is still a lot of availability of location. In fact, in 25 states of the country, we have a store coming up in the next six months. There is work going on in 25 states of the country. Till now, we are not facing. We still have more options in terms of real estate than we can open. Okay. I know SSG has come down a bit due to large base. Do you think it will come down further or it will stabilize at 10% going forward? I think it should stabilize at 8% to 10%. That is our target, even with a higher base. Okay. Is there any headwind that you are facing? Any concern at all that you would like to face or that you would like to flag? Any issue? Anything? No. In fact, even July, we are doing better than our expectations. The momentum is going good, and we are continuing to see amazing response in our older stores as well as the newer stores. We are still passing all the metrics that we have targeted. Hopefully, this momentum continues and everything looks positive. Okay. What is our first store opening cost? Basically, I wanted to know that if we raise the QIP INR 400 crores, how many stores can potentially be opened with that money? First of all, the whole proceed will not be for newer stores. A lot of it will be to get better terms from vendors, a lot of it will be to repay debt, and a lot of it will be to improve the backend capabilities in terms of automation, supply chain, and technology. Per store opening cost, including CapEx and inventory, is about INR 2.5 crore. We need at least INR 250 crore every year just to open 100 stores. Okay. Okay. That's it from my end. Thank you. Thank you. The next question comes from the line of Tejesh Shah from Avendus Park. Please go ahead. Hi. Hi, Akash. Thanks for the opportunity and congrats on a very good set of numbers. I first wanted to start with you speak very passionately about customer-centricity, and that seems to be working for us. As we expand rapidly, how are you ensuring that that value proposition doesn't get diluted? If you can elaborate a bit more on what we are doing to kind of be pretty sharp on this particular aspect of the business that you keep talking about? Sure. I think our biggest strength is leveraging data. We collect data from the customers and we say that 40 to 45 different attributes of each and every article. All the space allocation in terms of category, in terms of color, in terms of fit, in terms of print type, is done based on that data. If the customer behavior is telling us that a loose fit T-shirt is selling or giving us a 20% higher gross profit per square feet than a regular fit T-shirt, then we increase the number of options in the loose fit T-shirt. Similarly, if a color is giving us a better gross profit per square feet, then we increase. The mobile number is a unique customer ID of each and every customer. We do a lot of automation in terms of SMS, WhatsApp in order to get that customer back to the stores. I think the main strength is leveraging data, capturing data at so many different data points, and using that to improve the offering. That is why you can see our full-price sale is 92%. Even with lesser marketing spends, we're still getting more footfalls and doing a very healthy SSSG. Interesting. You spoke about a store expansion that will be entering new states. What percentage of your expansion will be in existing markets and which will be completely new states? What do you believe you will enter? About 70%-75% will be in existing states, and about 20%-25% would be in the newer geography. I think in two to three years, there will not be a single state which will be a new geography for us. We want to be a national-level retailer. That is our aim. That is our target. I think in the next three years, we will be present nationwide. Every market, every geography will become an old geography for us. I just wanted to understand, as it happens in the grocery retail, when they enter a new territory or new state, it is initially margin dilutive because of the whole logistic intensity which comes there. How does it play out in your business? Are the completely one-store states that are using margin dilutive initially? No. Our logistic cost is just 1.1% of the total business, which is not significant enough. Even if we open a new geography, the delta or additional logistic cost would never exceed 0.1% or 0.2%. That is never the determining factor of whether we're entering a new geography or not. It all depends on per-quarterly sale. It all depends on what kind of, you know, the offering that you give to the customer, collecting a lot of data in terms of what categories are doing well in that particular state or geography, what attributes of an article are doing better in those geographies, and then implementing all the learning that we got from the data when we open further stores in the similar geography. Sure. The last one, if I may, for the last almost 12 quarters, we have been kind of seen to be immune to the macro environment. We are growing irrespective of the commentary that we hear from larger consumer players also. Now, as we grow to a size where macros will matter, how is your read of consumer sentiment on the ground for this immediate this year or immediate future? When you hear stories, you definitely hear a demand pressure throughout the rural Tier 2, Tier 3. Like I said, even in July, we're seeing a good traction. It was, in fact, better than expected. I think when the macroeconomic factors and the macros also start supporting us, we can even post better numbers. Till now, we've seen that our product strength, our pricing strength, our variety strength, and the complete backend supply chain, the availability of products, all those strengths are working well for us. I think macros matter less when there's such a big shift happening from unorganized to organized. Even when the total consumption doesn't go up, this shift contributes to a good CAGR growth for just the organized part of the sector. Got it. That's all from my side. I wanted to discuss some important things. Thank you. The next question comes from the line of Niraj from White Pine Investment Management. Please go ahead. Hello. Sorry, I was on mute. Sorry. Thanks for the opportunity. How many stores are you in the discussion for between them right now? I think 76. There is still work going on. If you talk about shortlisted properties, there are more than 150 properties that are shortlisted. Okay. Is that 76 included in 150? No, 76 does not include that 150. Okay, how much timeline generally takes to from shortlisting to opening? There are different times. One is BTS, one is semi-BTS, one is where the raw building is ready. Typically, you can say three to six months. Okay. What is the new target for you to open the stores in FY 2026 and maybe FY 2027 if you can talk on that? This year, initially, the target was 100 stores. I think we are on track. We should be opening about 100 to 120. The next year's target will completely depend on this year's performance. If we have another blowout year like the last two years, then next year we will increase the target to 130 to 150 stores. Okay. What it means is that all these shortlisted don't go towards opening. Only some percentage of them go towards the opening. Is that the right way to look at it? Yes, yes. Okay. But aren't you upgrading your number of store additions after a proposal to increase the, raise the money? Yeah, it will be dependent on whether we go ahead with the QIP. If that happens, like I said, we will increase the store opening target this year by 20 to 25 stores and next year by 30 to 40 stores. Okay, that's extremelly comfortable. The other thing is only you're going all over a lot of new space. Are you going to put up new warehouses or only the existing ones? We just finalized the new zonal warehouse in the east. We have two zonal warehouses now, one in Gurgaon and one in the East. We have already started the hub and spoke model that we spoke about last quarter. We already have eight hubs operational now, which takes the load of the warehouse away. Now, whatever state we enter, the hub can easily fulfill the particular state. How much is this cost to increase because of the new East warehouse, warehouse in the East? There will be an investment, total investment of, I think, INR 25 to 30 crore in that new warehouse. Okay, that would lead to a meaningful increase in the east side. Is that the right way to think? All the sourcing done from the east or the cities that are closer to the East warehouse will go to the Calcutta zonal warehouse. All the goods sourced from Ludhiana, Delhi will come to the North warehouse. Each warehouse will send their goods to the respective hubs that will deliver to the stores. Got it. We have already started replenishing once in two days and a lot of stores daily, which used to be earlier once a week. For the fast-moving stores, it used to be twice a week. Okay. That's interesting. Last question on the revenue per square meter for new stores. Can you share some differences of the stores that you have opened in the same state that you are present in a reasonable way versus the stores that you have opened in the new state? Are you differencing revenue per square meter? We did take out this data, but we did not see any significant difference. In fact, a lot of newer states that we entered, the average per square meter sale for newer stores was better than the new stores that we opened in the existing geographies. It is dependent on a lot of other factors, that is competition intensity and the kind of population density. It is not completely dependent on a new geography versus old geography. What we have seen is the average per square feet sale of newer stores is constant across geographies. Those numbers are still tracking that within approximately two years, the revenue per square feet per store goes to the current average. You are still tracking that happening. Yes. Our benchmark is 30% lower than old stores, and currently, our newer stores are going somewhere around 26% lower than older stores. It is well within a healthy benchmark. From the first month itself, the newer stores are doing about INR 800 per square meter sale. Okay, good. That's wonderful. Thank you very much. Thank you. Thank you. The next question comes from the line of Aliasgar Shakir from Motilal Oswal Mutual Fund. Please go ahead. Yeah. Hi, Akash. Thanks for the opportunity, and congratulations on quite excellent performance. Akash, few queries I had. First is on the gross margin. I am seeing both on stand alone and console, our gross margins have seen very decent improvements. In fact, stand alone is higher. If you can just explain, is it a factor of mix or because one of the biggest factor that we had was we were far more competitive in the market. So have we taken any price increase and does that gap versus competition come down? And also if you can explain the gap of gross margin between stand-alone and consol? There are three, four things that happened here. One is definitely a product mix. Second, we reduced the overall marketing spend. A lot of marketing gifts that we give to the customer as a part of BillBuster is part of our gross margins. That had reduced, I think, 20, 30 basis points. Also, we made a cost committee about six to seven months back. Because of consolidating fabric purchases and fabric sources and, you know, doing open costing with the vendor, we were able to save about 1% of our gross margin there. The difference between standalone and consolidated is because now, we are shutting down our manufacturing units. Earlier, manufacturing manufactured goods, a lot of part of the cost of the product used to go in manpower cost. Only the raw material part of that goods were part of the costs. That is why there's a difference in the gross margin. Going forward, I think the gross margin that is there in the standalone will be prevalent and more relevant to our business. So sorry, I didn't get this point. I think the difference was in manufacturing was sitting in the subsidy, basically. Because of that, the margins are, you could be lower there because some of the companies are not like to like because the cost is coming in the gross margin. The margins are higher there because the cost only has the raw material part of the cost of making the product. The actual salary of the tailors and everything goes in the employee cost. Got it. Which will be the same now because of the sales account. Yes, yes. What did you have said to them? I thought that that was one of the more because of which we were able to get lower cost, you know, production. Yeah. The whole aim of opening the manufacturing units was to get transparent costs of making each and every category. It was not, you know, it didn't make business sense to be opening a manufacturing unit for every 30 stores that we added. It was only to get transparent costs so that we could negotiate the right prices and the right sand minutes for making each and every product with our vendors. We've been able to achieve that. In fact, we've given the factory to a vendor itself who's supplying it to us now. Instead of investing our own money and, you know, parking our working capital there, now we can achieve the same costs by getting it from contract manufacturers. Got it. There's no price increase or relative improvement from your side? No. Okay. In terms of the competition, you are still clearly competitive and sharp on pricing, right? Definitely. Got it. Second question I had on the SSG. In the past, the SSG model has become basically low. Now we are kind of indicating a SSG. I just want to understand from the industry perspective and how it has worked for us because generally, this industry seems to be a bit shy to change in two to three years or maybe four years after a very good, strong opportunity. Probably because of either market trust or the consumer needs more in terms of purchasing, you see those, we see going back to 33% and then again, rebounding. I mean, in the context of how the macro plays out, do you see any impact of SSG also for us? If you can just go a little bit inside from where this system strategy is likely to come from, if you want to share more footfalls, how are you guys thinking about SSG? Yeah. First of all, I think our segment is the least cyclical business. I think what we are selling can be categorized as non-retractory, looking at the average selling price and the price segment that we operate in. I think the cyclical or, you know, the numbers that you're talking about, it relies more on one's own execution level or if somebody makes a mistake. I think if you're doing the basics well and you're focusing on the trend and you keep offering what the consumer is asking you at the right price, then I think we should be able to get a 10%, a double-digit SSG going forward. Out of which, I think the ASP increase would be in placement. It should be about 3%, 4%, 5%. The rest of that should come from volume growth. That can also be from a mix of different footfalls as well as a rise in average bill value. Got it. Understood. Just last point on the storage. You told me that now you indicated about one year ago around 25% lower than they are open in the first quarter. If you think from a U.S. point of view, are they breaking in the year that they are open? How much time do they take to break in and for whatever indication you have in terms of our growth? How much will be the lag from the new store? Will they be, you know, from a bigger fact point of view, just in the first year itself? Like I mentioned, newer stores start from about 800 as old stores are doing 1100. Our break-even point is at INR 500 per square feet sale. Newer stores are breaking even from the first day, from the first month of operation itself. It's just that per square feet sale is 25% lower. Their EBITDA would be pre-index EBITDA would be 6% to 7%. The older stores would be somewhere around 10%. Got it. They will be slightly, you know, margin accretive from the first year itself. Yes. Got it. Just last thing is on your EBITDA margin. Now, because of the improved EBITDA margin now, I think you are hovering close to around 8%. Do you think you will maintain this and pass on the benefits to the customer in terms of, you know, better pricing? Do you think with your operating leverage, this margin can improve from yours? With our operating leverage, I think there is scope for the EBITDA margin to improve. There are three levers for that to happen. One is, the head office and the warehouse cost will be distributed over a larger area. The second is moving the per square feet sale even higher with that 10% SSSG. The third is better full-price sale and a better product mix. Like I said, our gross margin target is the same. It is around 28%-29%, which is already passing on most of the benefits to the consumer. These levers can be used for the expansion of EBITDA margins. Got it. What do you think you should use between 20%- 27% EBITDA margin? The target is 10%, but anything over 8% is good because even an 8% EBITDA margin gets us a 24% or 25% ROE. Of course, the target is to reach 10% in the next two years. It’s quite reassuring. Yes. Understood. Okay. Very clear. Thank you so much. This is for all the rest contact numbers. Thank you. Thank you. The next question comes from the line of Pallas Kavli from Luwamar. Please go ahead. Hello, sir. As there is no response, we'll proceed with the next participant. The next question comes from the line of Varun Singh from AAA PMS. Please go ahead. Excuse me, are you available? Yes, sir. Yes, sir. You're audible. Thank you. My first question is on core editing guidelines. I think you mentioned 124. Did I hear it clearly that 124 is needed for editing for record 2026? Yes. Okay. I think in terms of maybe 70, 72 stores that we added in 2025, around 100 of 124 we can add in FY 2026. I'm defending it correctly. Yes. Super, sir. My second question is on the objective of the country. I'm sorry I just joined the call 15 minutes late, and I'm not sure if you have already answered. I just wanted to get a bit of clarity and understanding on the INR 400 crore fund raise that we wish to do towards the objective of the usage of the fund. Yeah. It's about accelerating our momentum, like increasing the store opening target by 20, 30 stores every year. It is future-proofing our growth. It is being debt-free, so paying off all the debt. It is managing our working capital better in terms of being the best paymasters in the industry so that we can even get better costs from our vendors. It is investing in infrastructure and technology. It is a mix of all these things that the funds will be used for. Okay. As of today, in our balance sheet, we have a larger INR 100 crore of short-term borrowing and INR 20 crore of long-term borrowing, INR 130 crore. Is that because any reason that you are saying that you don't want to exist with short-term borrowing? Can you repeat that question? I lost you for a second. I'm saying that in your balance sheet, we have INR 120 crore of debt. Oh, 120 have also INR 25 million, which is within the public office short-term borrowing. When you say your objective is to repay the debt, you are saying that we will be free from all long-term, short-term borrowing, and in the future, we don't want to repair banking facilities. Yes, that's what I like. If we raise capital, then we will repay all the debt because, you know, it doesn't make sense to have that debt if you're raising money through QIP. Okay. After repaying that, what is the second major cause that you wish to resist? Is it store opening? What would be third? Yeah. First will be repaying debt. Second will be, you know, additional if we open 25, 30 stores also. In two years, there will be 60 additional stores. For that 60 stores, we need about INR 150 crore. The rest will be for, you know, paying off our vendors, better payment terms for vendors so that we get a better pricing, more sharp pricing, so that it increases our competitive advantage. The rest would be for newer, you know, warehouse investment, technology investment, infrastructure investment. Okay. Understood. Just one last question. You spoke about the value chain or the warehousing part wherein we will significantly improve our supply chain, which in order to maybe do twice to two days' work in a week. In this regard, just wanted to understand that will there be a meaningful, I understand one question is your logistics cost, but since the cost of servicing stores from that point of view, will there be a meaningful investment on that front? My understanding is it is margin equity. If you can educate us some, a little bit on this investment and the benefits. Yeah. See, increasing the frequency of dispatches or fulfillment at the store, of course, will reduce your transportation cost. What it does is you have to hold lesser inventory at the store. It improves a lot of store operations, and it improves a lot of inventory management at the store. Those benefits would be seen in the subsequent quarters. That could lead to even a better, higher per square feet sale. That should lead to lower inventory at the store level. Those are the benefits of this. Of course, it makes the store operation a lot easier because instead of processing seven days' worth of inventory together in a day, now the store team has to do that only two days' sale inventory. Understood. Understood. Sure. Thank you very much, Akash. I think this is all the questions. Thank you. Thank you. The next question comes from the line of Jogani from JM Financial. Please go ahead. Hi. This is Gaurav from JM Financial. My question is with regards to just a clarification on the volume and the revenue growth. When I see the volume growth is around 50% for Q1, and the ASP increase comes around, you know, from 250 to 300, so it's around 20% odd. Not 20, they are 15, 16%. Where is the disconnect, because the top line growth is around 52%? I think that's because of the change in product mix, because we have reduced a lot of general merchandise goods whose ASP was really low, like INR 30, INR 40. Panel contribution has gone up, which is why we're seeing such a sharp increase in the ASP. Okay. That's helpful. I guess my next question is, given that you are increasing the overall scheme of operations with practically 150 stores being added in this year, or rather only the stores being added in FY2026, and another 150 odd would be next year, how are you building the team strength? What all additions have been done at the overall team basis? You did mention on the warehouse capabilities, but what all capabilities other than this would be required to reach to the next next level of your revenue targets and store targets? Yeah. See, there are three pillars to this. One was, of course, the supply chain. We've taken care of that. We finalized the warehouses. In terms of technology, we have invested in Sensex PLM and Sensex Planning. That's also a pretty significant investment that will take care of the process planning, replenishment, and assortment planning part of it. In terms of team, we have been on a hiring phase for the last two years because we knew the kind of growth we wanted, and we wanted to build a strong foundation. We have hired, I think, the key manager person in a lot of new departments. Our business development team used to be four members. Now it is 16 members. Similarly, that kind of expansion has happened in each and every team because, again, if you want to grow at 50% for the next few years, then all the manpower and all the bandwidth is welcome. We started focusing on adding two years back, and it is still a focus. We are still hiring. I think we already have a very good bandwidth, and we closed that by opening 72 stores last year. We are well on track to open 120, 130 stores this year. Management bandwidth is not a problem because we started focusing on it two years back. Sure. The leading question to this is, you know, given that now we are seeing many value retailers getting aggressive on store expansion, if we just calculate the total store openings by you, from your size, Union, et cetera, it comes around, you know, practically 1,000 odd stores being added during the year. Now, given this, are you seeing inflation in the rentals for the new properties or inflation or any shortage in the manpower that you are looking to hire because the talent crunch, again, would be lifted to that extent? Any cost inflations that you are definitely getting, how are you managing this? The average rental currently for us is about INR 53. If you look at the average rental of the new stores that we've finalized, I think it's around INR 41 or INR 42. In fact, it is less than the average rental we are paying today. We've moved away from the idea that, in order to enter a market, you need to finalize a store right in the center of the market, because we give importance to other factors like floor plate and parking that enhance the customer experience. We've seen that the customer, if you have the right product and the right brand recall, then you can attract the customer 500 meters to 1 kilometer or 2 kilometers away from the market also. That is really helping us find good locations with a big floor plate, big frontage, and at a much more competitive price than if you were looking for a location right in the center of a market. Sure. Sure. Any increases in manpower costs that you have seen, you know, given that now there is also a diversion of the manpower to the good commerce guys also? The lower-level employees, are you facing any challenges to hire there? The lower-level employees at the stores are mostly at the minimum wage. Attrition was always high there. That is why the last five years we moved away from being manpower-centric to being a lot of process-focused, where anyone even in two days can get the training and start getting output. All our store operations do not rely on manpower. They are completely automated and completely process-driven. We are not facing a lot of challenges there. Got it. Thank you for asking my questions, Akash. All the best. Thank you. Thank you. Before we proceed with the next question, a request to all the participants, please limit your questions to two questions per participant. Thank you. The next question comes from the line of Palash Kawale from Nuvama Wealth. Please go ahead. Thank you for the opportunity. I hope I'm audible this time. Congratulations on the good set of numbers, Akash. My first question is on finalizing the location. What kind of materials do you look at apart from the parking that you mentioned? Is it also like you in this sort of shape and size of the floor plan that you are getting? Is it also important for you? Yes, definitely. The floor plan is also important. We have about 70 different factors we look at: the distance from the railway station, distance from the nearest bus station, the average benchmark sale of the competitors, the width of the access road. We have made a model which helps us give a probability out as to how that store would be. We have seen from our experience that how many variables you add, the model hasn't been that accurate. We take into account continuously that if we open 100 stores, we might have to shut down four or five stores. Yes, the floor plan is also taken into account when we open a store in terms of efficiency of display and the customer movement. Okay. That's really helpful. My next question is, I think Q1 was supposed to be a seasonally, slightly weaker quarter because of shifting teams with shifting teams. Despite that, you have grown by 50%. Is it safe telling that for the whole year, like you'll be easily getting being better than what you are driving right now? We always believe in, you know, under-promising and over-delivering. I wouldn't want to get expectations too high. Yes, definitely, like I said, even in July, that trend is continuing. Internal targets are definitely better, but we guide for 50% revenue growth and a little bit of expansion in EBITDA, which is anyway phenomenal in itself. If we do anything better, it will be over-delivery. Okay. Yeah, that's it from my side. All the best for the upcoming quarter. Thank you. Thank you. The next question comes from the line of Kushal Goenka from Mangal Keshav Financials LLP. Please go ahead. Yeah. Hi. Thank you for the opportunity. I'm Kushal from Mangal Keshav. My first question is a follow-up on one of the participant questions on the QIP. INR 400 crore is more than the total current equity base that we have. I just wanted to know the rationale that isn't this a good valuation, which would also harm the return ratio for the foreseeable future? Because currently, we are doing around 25% ROE per month. I'm repeating this, but as you mentioned in the last call, I said that we would not need any equity or borrowing. What changed in one quarter, and when will the QIP happen? We have already been clear that if we have seen that the good performance continues and we want to accelerate our growth, then we will not look at additional debt and we would look at, you know, Qualified Institutional Placement or equity valuation. Right now, also, it is just approval of, you know, enabling the Qualified Institutional Placement process. We have always been very disciplined in our capital allocation. Our return metrics speak for themselves. I think if we do a Qualified Institutional Placement, it will always be in line with creating long-term value for all our shareholders. I have already mentioned the needs and if we raise funds where it will be used. I think it is about, you know, if you are doing well, it is about the next three, four years being a good time to get a good market share in this Indian manufacturing market. Okay. Sir, since you are planning to become a full-fledged family of your peers, are you planning to hire more senior management like a CEO or Regional Heads? Yeah, we are hiring across departments, and we are looking for Senior Management people also. We have hired, in fact, three key managerial personnel in just the last three months. With the kind of growth trajectory we are on, we would need all the bandwidth, and we are well prepared, and we are looking for good people who can contribute to our business. Okay. Great. Thank you so much for that part. Thank you. Thanks. Thank you. The next question comes from the line of Vishnukant Lakhani from Bastion Research. Please go ahead. Hello? Yes, sorry. Hello. Please go ahead. Congratulations for this type of project. I have a question regarding brick and mortar. Which is currently your business? Are you planning to continue online, or are you just going to continue with brick and mortar? Yes. We are exploring the omnichannel business. I had mentioned this earlier that we are still struggling with a good technology partner. It's not of a very urgent priority for us. Even when that omnichannel business gets mature, it would not contribute to more than 4% or 5% of sales. Looking at the... Next question. We're designing against AB Capital. Earlier, you mentioned that you are not going to raise capital. You will just raise. If you are contributing more future, will you raise capital again? There is a lot of disturbance from your line. Your voice is not clear at all. Hello? Sir, may I request to use handset? Okay. My question is already answered. Thank you. Thank you. Thank you. Thank you. The Thank you. The next question comes from the line of Varad Patil from New Vernon Capital. Please go ahead. Thank you for the opportunity. I'm wanting your total capital score of about 10%. Can you break it down into the capital score and the other additions that you are doing and the benefits? We plan to open 120 stores this year. That is around INR 300 crore of CapEx plus inventory required for those stores. If you include technology warehouse, that would be additional, I think, INR 40 crore of CapEx. Okay. INR 3 crore per store. Earlier, you used to write the INR 3 crore CapEx per store including inventory. Today, you mentioned that it's INR 2.5 crore per store. What is the CapEx? CapEx was INR 1.1 million, and inventory was about INR 1.3 million paid inventory. It was always INR 2.3 million to INR 2.4 million, and it is still at the same level. Okay. So INR Okay. So INR 2.5 crore is higher than the other ways of replacing? Sorry, you're not audible. I just wanted to clarify that part. Anshu? You mentioned INR 2.5 crore per store. That is the higher-end CapEx per store that you expected, not on average basis. No, it was always 3.4, always rounding it up because, you know, every quarter we open 30 stores, there will always be additional inventory in the system for those upcoming stores. Okay. You're not targeting an increase in capital cost? No. No. No, thank you. Sure. Thank you. The next question comes from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yes. I thank you for the opportunity. Akash, you mentioned increasing the frequency of drops in the stores, right? I wanted to test because we did some visits to your stores. This suggested that you also have a local warehouse, which is quite differentiated versus the other value retailers that operate in the specific areas. How do you see that? Obviously, in local warehouse, we could have sort of some lengthier stores, and you're currently doing them on the main floor. Do you plan to sort of move away from that local warehouse model by increasing the frequency of drops in your stores? Just wanted some thoughts around that. Currently, the store warehouse takes anywhere between 7% to 8% of the floor area. Now that we're doing urban stores and the frequency has increased, we are reducing the warehouse area to just 2% to 3%. That gives more space for the customer, more space to display more options, and less store operation in terms of put-away and picking. Understood. Understood. Currently, you mentioned that your inventory exposure is INR 1.1 crore. Obviously, with higher frequency of drops, you would be requiring more inventory exposure. What is your targeted inventory per store? Maybe you may have one to two years down the line in terms of this model. What is the target of inventory exposure? Currently, we keep about 10 to 12 days of sales cover at the store. We plan to bring it down to just three to four days, except the display stock. There's a display stock, and then there's a 10 to 12-day sales cover at the store. We plan to bring that down to just three to four days. Understood. What would be the segregation between the display and the cover? I think broadly between the. Display is always constant, no matter the per-quarter sale of the store. The sale is dynamic. Display is about 40 to 45 days, and the rest is sales. Understood. Lastly, I also wanted the transparency on in-house sourcing, outsourced manufacturing that will be not immediately pursuing. Currently, what was the component of in-house sourcing for us through our own manufacturing facility? It was about 5%. Oh, okay. Only 5%. Okay. From our new store expansion perspective, what is the. May I try to understand you again? Thank you. Sure. Yeah. The next question comes from the line of Ankush Agarwal from Surge Capital. Please go ahead. Yeah. Hi, Akash. Thank you for taking my question. Just one thing, Akash. In the last one and a half years, we have clearly extended the store addition, which caused the store growth of almost 70%. Now with the funders also, we are looking to raise more, even though it is good because we are seeing positive signs. The other aspect is also that an uncontrolled store expansion is basically the primary reason why a lot of retail outlets eventually fail. We also had a past bad experience with them. Also, the balance sheet is different. Back in 2017, also, we added, say, 70% more stores in just one year. The next three quarters are not good because the SSG was not good. How do you see that, the kind of the risk going ahead now, given that we are continuing to add stores at a very rapid pace? Yeah. First of all, whenever we talk about store opening numbers, we've always mentioned that we don't want to blindly chase growth by compromising on any of the metrics. That is, per square feet EBITDA, per square feet gross margin. Whatever expansion happens, it happens in phases. The next phase of expansion is always dependent on the execution of the previous phase. The day we feel the newer stores are not within the benchmark of 30% of old stores, the old stores' SSG is going down, or any of the metrics we see that it's not up to the mark, we would just postpone and cancel the next expansion phase. Second, we've never been in this position where we have the leadership position in terms of per square feet sale, in terms of profitability. Wherever we have a store, we are at least 30% to 40% higher in terms of throughput and sales than our competitors. I think we've never been in this position of strength where we felt that we were strong enough that now we can open or grow at this speed. Third, if you look at the last four or five years, that was a period of consolidation. If you look at the growth over five years, then it would not look that much. Those four years were about extending the model, increasing the per square feet sale from 650 odd to more than 1,100 for the old cohort of stores. There has been a fundamental change in the business, which gives us this confidence. Like I said, it's only after we have built a foundation now in terms of management bandwidth, in terms of technology, in terms of getting the product right, getting the supply chain right. There's very little manual intervention in a lot of processes of the business. That overall gives us the confidence that we can do this. Last year, also, the 72 stores that we opened, the response has been phenomenal, and the kind of customer feedback that we are getting. Altogether, I think it gives us the confidence that we should be accelerating growth. Okay, just one thing. In your understanding, if you are getting, say, 8%-10% SSG, then you're comfortable opening, say, 50%-60% store addition. In your understanding, that is not the best, right? There are two things here. SSLG is one. Second is what percentage, what per square feet sale are the newer stores doing? That has to be within 30% of old stores. Even with the 10% SSLG, if newer stores are doing maybe 40% or 50% less than old stores, then we would have to rethink the strategy. Okay. Okay. So, 8%-10% SSSG, 30% lower square feet input is the equal benchmark to look at. Yes, yes. Got it. Got it. That was very helpful. Thank you. Thank you. Thank you. The next question comes from the line of Rohan Advant from Prad Capital. Please go ahead. Yeah. Thanks for the opportunity and congrats on a good set of numbers. Sir, my first question is that your ability to improve your team, that is the margin from 8%-% 10% over the next couple of years in spite of the flexibility from ramp-up in store addition, is that dependent on a certain SSG number? To 8-10%, do you feel confident that you should deliver that, or will you use a higher SSG to expand margins from here on? Yes, it's a very valid question. The aim of 10% EBITDA, for that we would definitely need a higher SSG. I think the SSG we need for that would be around 13%- 15%. That is why I also said, you know, anything above 8% is good. That is our aspiration, that is where we want to get to. There should be higher SSG and, of course, a better product make, better full-price sale, and, of course, cost leverage also. All those three things need to happen for the EBITDA to expand 200 basis points in the next two years. At that 8%- 10%, 8% margin is defensible. No. If it is 8%- 10%, then we might go to 9%. We might not reach 10%. Yeah. Just lastly, on the either cleaning labs versus collecting labs accounting, one of your peers has, I think, restructured their resource to bridge the gap between the two. Do you plan to do something like that, or you are not currently thinking about it? No. We only focus, we track business performance on just pre-index basis. I think it would be redundant to focus on the post-index because I think for a business like ours, it's an irrelevant number. We focus always on pre-index numbers, and we always give guidance on pre-index numbers. You don't need to do that. Okay, understood. All the best. Thank you. Thank you. The next question comes from the line of Jatin Deshpande from Pkeday Advisors. Please go ahead. No, I see. Can you hear me? Yes, sir. Yeah, I wanted to ask on the SSG. Can you quote the SSG number for the stores that are greater than two years old? If you have any idea on that? I don't have it offhand, but what we've traditionally and historically seen is the newer cohort stores are growing at a higher rate than the old mature stores. Right. That is the reason I'm asking is, as you say, this 8%- 10% SSG is so small. Can I assume that it is going to be the same for the next three to four years? Yes, we would like it to be the same for the next three to four years. It all depends on the execution. If your business model is good, if your product offering is good, there are enough customers in the market, and there are enough customers entering your total addressable market every year for a good brand to be doing a double-digit SSG. Got it. My last question is on the store ramp-up like you have planned. I have to assume that your stores are much better in our core markets like you feel you are. What are your, how you plan adapting newer stores in the new markets like, let's say, Karnataka or Maharashtra? How do you plan the merchandise and the forms there? I already mentioned this also, the newer stores that we open in newer geographies are at the same level as the newer stores in the old geographies. Whenever we enter a new geography, we collect a lot of data from the store that we've opened, and all the subsequent stores that we open in the new geography or the new state already have the assortment and the safe allocation by using the data from the older store. Got it. Got it. Any problem on the supply chain side? Do we have any concentration from the vendor side, or do you have a diversity of vendors? We have about 250 vendors. 30 diverse team, and we have more than 500 vendors who want to work with us. That's not a challenge, and we are not over-reliant on any fulcrum or any group of vendors. Thank you. Thank you. Thank you. Thank you. Thank you. The you. The next question comes from the line of Karthik from LSC Securities. Please go ahead. Hello, sir. As there is no response from the participant, let's proceed with the next participant. The next question comes from the line of Rajesh Vora. Rajesh Vora from Jainmay Venture, please go ahead. Good afternoon, Akash. Congrats. Very big set of numbers. Your estimation has been to reach INR 1,500 revenue per square foot per month. Is that possible in the next three years given this aggressive ramp-up of useful? Sorry, can you repeat that question? Your estimation has been to reach INR 1,500 of revenue per square foot per month for V2 Retail. Is that optimal in the next three years given the aggressive ramp-up of useful? I think that's really too optimistic. Even if we reach INR 1,200 CFS at the national level, old and new tools combined in the next three years, that would be an amazing trajectory for the business because even with the INR 1,200 per square foot of sale, I think the ROE numbers are around 40%, which is phenomenal. That would be our first target before we talk about any number higher than that. Good. Okay. That's good. At that level of INR 1,200 per month, in the end, the EBITDA margin should be what, maybe 5%? I think at INR 1,200, it should be around 11%. 11%. Okay. You think is feasible in the next three years? If we continue doing the good work and if we are on this trajectory and we continue the momentum, then yes, that is the target. Interesting. That's useful. Okay. Senior Leading Risk Engineering, are you assuming that role or are you looking for your gentleman? How are you thinking about that? I have assumed that role currently. We are on the lookout for a lot of positions also because, with the growth trajectory, we need more people. Right now, I'm handling it and I've assumed the role. Okay. Last thing, what is the typical incentive structure for who are being paid well and helping the company grow pretty well consistently over the last few quarters? We've already reached 90% of MRP. What's the typical structure? Given the aggressive growth we are planning, how can you maintain your best-in-class, rigorous processes and equity to look at this kind of growth? Yes, a lot of our team and people still at the store and head office, they're already given retention bonuses. In terms of variable salary, each one of them has monthly, quarterly, and annual targets. They have different slabs. They can earn as much as 50% of their salary if they achieve certain targets. The last two years, because we've performed so well, I think average everyone has been getting about 15%, 20% variable percentage of their salary. That seems to be working well for us and motivating our employees. Interesting. Does that mean that we are amongst the best team after on a quoting basis compared to our competitors where just quotes can work or have you never seen before? Yes, definitely. Because we've been able to achieve our targets for quotes with the incentives, we would definitely be paying them more than what their counterparts are earning at competitors. We don't have the exact benchmarking. Looking at a lot of store managers and Assistant Store Managers, the system has been lettered since we have announced this scheme. It seems to be working well. Great. Thank you so much, Akash. I'll be very much on this topic. Thank you. Thank you. The next question comes from the line of Nitin from NV Alpha Fund. Please go ahead. Ladies and gentlemen, you have lost the queue. Give me a moment. The next question comes from the line of Aakash from AJ Wealth. Please go ahead. Okay. Connotations of these set of numbers. One question, which is to, I mean, for the last two years, we have rapidly expanded. This year again, we are planning to open a little bit of scope. I mean, many consumer companies are reporting weak or limited demand. What is the energy system expansion at such a high pace in the current environment? We are expanding not for the short term or just to get profits of one year or two years. It's a long-term expansion for the next few decades. Short-term macroeconomic factors can't affect decision-making in terms of growth trajectory of the business. Okay. Last question, our full-price sales are at 92%. I mean, compared to other retailers, this is quite high. How are we maintaining such high full-price realization? Is it an expansion of brand positioning, supply chain efficiency, or store-level aggregation? It's a mix of, you know, better merchandising, better supply chain. I think it's a mix of all those things. The team's being efficient and, you know, offering the right kind of fabrics, colors, shapes that the customer likes, and, you know, we don't have to put it as a discount. Okay. Just last question on the design team. I mean, your in-house design and production team, they play a very superior role. What is your competitive edge there? It's very hard to explain that on a call until you go and visit our store and see our products versus our competitors, because everybody on a call can say their products are better or their assortment is better. You need to actually see the product, see the pricing, see the quality to understand why our per square foot sale is higher, why our footfalls are higher, why our conversions are higher, and why profitability is higher. Okay. Thank you. Ladies and gentlemen, we take this as our last question for today. I would now like to hand the conference over to Mr. Akash Agarwal for closing comments. Thank you all for joining us on today's call. We hope you've been able to address your questions and provide clarity on our performance and outlook. Should you require any further information or have any additional queries, please feel free to reach out to Marathon Capital, our investor relations advisor. We'll be happy to assist you. We appreciate your continued interest and support. Thank you and have a nice day. Thank you very much. On behalf of V2 Retail Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.