Vishal Mega Mart Q1 FY27: Growth holds up, margins stay steady, and the store engine keeps running

Vishal Mega Mart began FY27 with a strong operational quarter. Consolidated revenue from operations for Q1 FY27, the quarter ended June 30, 2026, stood at INR 3,727.0 crore, up 18.7% year on year. Growth was supported by a 10.0% same-store sales growth (SSSG), showing that demand held up even beyond the benefit of store additions.

Profitability improved modestly. Gross profit increased to INR 1,068.8 crore and gross margin expanded to 28.7% from 28.4% a year ago. Operating EBITDA (pre Ind AS 116 and pre ESOP) rose to INR 387.0 crore from INR 324.4 crore, with operating EBITDA margin at 10.4% versus 10.3% last year. Profit after tax was INR 258.8 crore, up 25.6%, and PAT margin improved to 6.9% from 6.6%.

Management described the quarter as a good start to FY27, while acknowledging a challenging and uncertain environment. It noted that inflation weighed on demand during Q1, but expects the impact to taper in subsequent quarters.

Category mix: FMCG remains the largest contributor

The company’s revenue mix remained stable, with FMCG as the largest category. For Q1 FY27, apparel contributed 25.2% of revenue from operations, general merchandise 27.3%, and FMCG 47.4%. In absolute terms, the presentation disclosed INR 937.5 crore from apparel, INR 1,016.7 crore from general merchandise, and INR 1,765.5 crore from FMCG.

Management also highlighted the continued dominance of private brands. The presentation stated that 75.2% of product sales in Q1 FY27 came from own brands. On the earnings call, management added important context: apparel is entirely private brand, general merchandise is about 75% private brand, and FMCG private brands account for 60% by volume.

What drove the gross margin uptick

The gross margin improvement this quarter was explained largely by lower promotional spending versus the same quarter last year. Management said its focus in Q1 was to maintain prices and ensure the overall numbers add up, which helped same-store growth and reduced the need to promote as aggressively.

On pricing, the call offered more nuance than a simple inflation narrative. Management said it tried to minimise price hikes and, without exception, avoided any increases in opening price points and mid price points. Where price increases were necessary, they were taken in higher price points and selectively across categories. Management also said that, at the time of the call, it did not see a need for further price increases beyond what had already been implemented, assuming conditions do not worsen.

Store expansion: 819 stores across 559 cities

Vishal Mega Mart continued to add stores at pace. It opened 27 new stores in Q1 FY27, taking the total to 819 stores as of end-June 2026, with a presence in 559 cities. The company’s total retail area was disclosed at 1.38 crore square feet.

Regionally, the company disclosed both footprint and revenue mix. Store footprint as of end-June 2026 was North 311 stores, South 222, East 204, and West 82. In Q1 FY27, revenue contribution by region was South 39.5%, East 28.5%, North 23.4%, and West 8.6%.

Management also discussed small-format stores, describing them as roughly half the size of regular stores and, accordingly, delivering about half the absolute revenue and margin per store. However, it said revenue per square foot is in line with larger formats and returns on capital employed are broadly similar. The current small-format focus is in Uttar Pradesh and Haryana, where the company believes it has largely exploited the opportunity for larger formats.

Quick commerce: contribution ranges from 2% to 9% of store revenue

The quarter also showed continued scaling of the company’s quick commerce platform. The presentation disclosed that hyperlocal delivery is available through the company’s website and mobile app, with 767 stores enabled across 520 cities and about 1.41 crore registered users.

On the call, management quantified performance at the store level. It said quick commerce contributes between 2% and 9% of store revenue depending on how mature the market is, with most locations now at least 5% and the best locations reaching 9% to 10%. Average bill value for quick commerce was stated at about INR 800, slightly higher than offline but not materially different.

A notable channel insight was private brands. Management said private brand share on quick commerce is even higher than the overall offline mix, suggesting that the digital channel may be reinforcing private label adoption.

Operational initiatives: RFID rollout moves beyond pilot

Vishal Mega Mart also outlined progress on RFID, positioned as a supply chain and store productivity initiative. Management said it previously piloted RFID in two Delhi NCR stores and is now rolling it out across all Delhi NCR stores. The company plans to proceed state by state and expects full network rollout to take slightly over one year.

The benefits cited were tangible and operational. For apparel, stock counting that previously took overnight can be completed in 4 to 5 hours with RFID, enabling more frequent stock counts, potentially weekly. Management also expects better information on inventory and ageing and a reduction in shrink in RFID-tagged stores, supported by tags that cannot be removed unless merchandise is checked out.

Customer base: loyalty remains central

The presentation highlighted a large loyalty base, with about 17.5 crore registered loyalty customers, up 16% year on year. It also stated that about 95% of revenue comes from loyalty customers.

In Q&A, management linked loyalty and customer analytics to performance, pointing to the 10% same-store sales growth as evidence of value being extracted from existing customers.

Costs to watch: minimum wage inflation and execution complexity

While the quarter showed stable operating performance, the call flagged cost pressure from minimum wage increases. The CFO said the company saw significant increases across multiple states including Haryana, Uttar Pradesh, Telangana, and Karnataka. It described this as a structural change, while also stating that the company will continue to look for optimisation opportunities.

The RFID rollout is another execution-heavy program. Management explained that rollout requires tagging existing store inventory first and maintaining a separate tagged supply chain for RFID stores, making it operationally complex and inherently time consuming.

Closing inventory

In response to an analyst question, the CFO stated that closing inventory for Q1 FY27 was INR 1,900 crore.

Takeaways from Q1 FY27

Vishal Mega Mart’s Q1 FY27 was defined by strong revenue growth, double-digit same-store sales growth, and stable operating margins. Gross margin improved, and management attributed this primarily to lower promotional intensity.

The company continues to execute on multiple growth levers at once: accelerating store additions, pushing quick commerce adoption at the store level, and investing in operational capability through RFID. The near-term monitorables remain inflation-led demand volatility and wage inflation, alongside the company’s ability to scale execution-heavy initiatives smoothly over the next year.