CXO 1×1: Gunender Kapur, MD & CEO
High confidence on Kerala TAM opening up in a material way was one of the major takeaways from our meeting with GK. Read on: (1) Strong traction in Kerala with a ~100-store opportunity; entry in Tamil Nadu will be in a phased manner to protect store economics. (2) Mix is premiumising, with premium apparel growing the fastest in a demand environment that is currently fully volume-led. (3) QC contributes ~3-4% of store revenue on average (range: 2-9%) with ~20% new customers. (4) Private labels remain a key margin lever with healthy penetration across core categories, though adoption varies by segment. (5) A clear value gap vs. local cooperatives and a differentiated role vs. DMart supports competitive positioning. (6) Execution remains strong with shrink (inventory loss) at ~0.59% and ROCE at ~70%, supporting a fully company-operated model. BUY.
Expansion momentum strengthens medium-term visibility
Vishal Mega Mart (VMM) continues to build a dense, repeatable expansion model across tier II/III markets. Kerala has emerged as a strong next-leg opportunity, with management identifying a ~100-store potential, a meaningful opportunity given UP currently has ~125 stores. Early traction has been encouraging, supported by compact formats and strong value perception. Tamil Nadu will be approached in a calibrated manner to protect early unit economics and ensure consistency across the model as the footprint expands.
Mix continues to premiumise
Fast fashion remains a core driver for VMM, supported by weekly design refreshes and sharp affordability for younger customers. Mix continues to improve, with premium apparel gaining traction while affordability remains a key strength for VMM in a volume-led environment. Rising digital exposure and improving affordability across small-city India continue to support steady fashion demand and healthier throughput across stores.
QC scales steadily
QC has scaled steadily, contributing ~2-9% of store revenue depending on market maturity, with a blended ~3-4%. Roughly, 20% of QC users are new to Vishal, making it an effective acquisition channel. Fulfilment is handled directly from stores, enabling efficient order picking without any additional space or separate inventory.
