Earnings Call Transcript - XNSE:V2RETAIL 2026-11-04

Operator

Ladies and gentlemen, good day, and welcome to V2 Retail Limited Q2 and H1 FY27 Earnings Conference Call. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Before we begin, a brief disclaimer. The presentation which V2 Retail Limited has uploaded on the stock exchange and their website Including the discussions during today's call, contains or may contain certain forward-looking statements concerning V2 retail limited business prospects and profitability, which are subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Aakash Agarwal, Director and CEO, V2 Retail. Thank you and over to you, sir.

Aakash Agarwal, CEO

Good afternoon, ladies and gentlemen. I, Aakash Agarwal, welcome you all to our Q2 and H1 FY27 earnings conference call. Thank you for your continued trust in V2 Retail, India's leading value fashion retailer for Bharat. V2 was founded with a simple mission to democratize fashion by offering high-quality, trendy apparel at affordable prices to value-conscious customers. Today, we proudly serve India's growing neo-middle-class and middle-class populations across Tier 2 and Tier 3 cities. As of 30th September 2026, we operate 427 stores across 27 states in more than 340 cities, covering about 4.6 million square feet of retail space. We have a complete value chain from an in-house design team of 60 designers to dedicated job workers to three warehouses, 22 hubs, to our own fleet that refills inventory at stores every alternate day. Our motto, value and variety comes to life through this. This was a quarter of aggressive expansion with short-term pain for long-term gain. In Q2 FY27, we opened 49 new stores and closed 3, taking a total to 427 stores. In the first half of FY27, we opened 106 stores and closed 4. This is our highest ever H1 edition. 60% of these new stores are in core states, UP, Bihar, MP, Odisha, and Assam, where our brand recall is very strong. Second, volume-led growth. Despite muted consumer sentiment, we delivered strong volume growth. In the second quarter, volume growth was 31% year-on-year. In the first half of FY27, volume growth was 43% up year-on-year. This shows our value proposition is working. Customers are buying more from us. Three same-store sales growth. The FY27 SSSG showed minus 14.9%, but normal SSSG was plus 0.5%. Because Q2 last year had an early Durga Puja and an extended wedding season, while this year the festive season shifted to Q3. If we adjust for this, we are 0.5% positive. The first half SSSG was minus 3.7% calendar basis. Our sales per square feet per month was 700 rupees in the second quarter versus 933. In the second quarter of FY26, and 7.85 in the first half of FY27 versus 9.48 in the first half of FY26. This drop is expected because we have opened 106 stores in six months. New stores take up to two to three years to mature, and also because of the shift of the festive season. Mature stores, which are older than two years, are still doing 1,000 rupees plus PSF. Four, customer metrics remain strong. Average bill value was 917 in the first half of FY27 compared to 900 last year. Our average selling price was around 307 in the first half of the year versus 309 in the first half of the last year. Full price sales was 91% in quarter two and H1 versus 92% last year. We are not a discount retailer. We sell at MRP. Revenue mix remained primarily the same. Men's wear about 40%, ladies 29%, kids 22%, and lifestyle 9%. Now, I will take you through our consolidated financial performance. Revenue from operations was 905.6 crores in the second quarter versus 708.6 crores in the second quarter last year, registering a growth of 28%. This growth is entirely volume-led. Gross profit was 281.3 crores versus 198.2 crores, a growth of 42%. Gross margin improved to 31.1% versus 28.0% last year, an expansion of 310 basis points. With India's was 120.3 crores versus 85.4 crores, a growth of 41%. EBITDA margin stood at 13.3% versus 12.1%. EBITDA pre-India's, our real cash EBITDA, was 53.4 crores versus 44.4 crores last year, growth of 20% with a margin of 5.9%. PAT was 18.2 crores versus 17.2 crores, a growth of 6%. The PACT margin was 2%. PACT growth is lower than EBITDA because of higher depreciation, 68 crores of depreciation versus 37 crores of depreciation last year from right-of-use assets for the 106 new stores. Now, consolidated financials for the first half of the year. Revenue stood at 1902.8 crores versus 1340.9 crores, a growth of 42%. Gross profit grew from 384.4 crores to 566.4 crores with a 29.8% margin. EBITDA grew from 172.7 crores to 259.7 crores, a growth of 50%. Pre-India's EBITDA grew from 96.9 crores to 132.8 crores with a growth of 37%, and the PAC grew from 41.9 crores to 60.1 crores with a growth of 43%. As of September 30, 2026, inventory stands at 1,447.8 crores versus 1,141 crores at the end of March 2026. The increase of about 306 crores of inventory is for the 106 new stores, advanced festive stocking for quarter three, and the new store pipeline for quarter three. Our festive inventory is already at stores. Borrowing stood at 528 crores, of which 45.6 crores is non-current, and 483 crores is current, versus 253 crores in March 2026. The increase is to fund growth. The net working capital increased to 88 days versus 81 days in FY26 due to higher inventory. This will normalize in quarter three after the festive sale. Long-term track record. So, from FY22 to FY26, our revenue grew from 629 crores to 3067 crores, almost five times. EBITDA grew from 65 crores to 455 crores, and packed from a loss. To 162 crores at the end of FY25. We have demonstrated a profitable scale-up. So, friends, we are at an inflection point. Why did we open 106 stores in the first half of the year? We have reached a stage where our back end, which is the design, sourcing, warehousing, and talent, can support 150 plus stores per year. The demand for value fashion in Bharat is huge. The market is shifting from unorganized to organized. We want to capture this first. It has put short-term pressure on SSSG and PSF, but history shows that our new stores break even in the first month and achieve company average sales within 2-3 years. Quarter 3 will be our biggest quarter ever. Durga Puja, Dashera, Diwali, the wedding season all fall in Quarter 3 this year. Our inventory is ready. We expect a strong recovery in SSSG and PSF. We plan to open only 60 to 70 stores in the second half of the year, focus on consolidating operations and sweating our existing 427 stores. With gross margin now at 30%, we aim to sustain around 29 to 30% gross margin and 13.5 to 14.5% EBITDA margin for the full year. As festive inventory cells, Net working capital should come back to around 75 to 80 days by March 2027. We remain committed to our mission to provide affordable, high-quality fashion to every Indian. With this, I open the floor to question and answers.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vaibha from Hightong India Securities. Please go ahead.

Vaibha, Analyst — Hightong Securities

Hi, thanks for the opportunity. Akash, my question was on our LFL growth for Q2. We have posted a negative growth because of the shift of festival season. I wanted to get more color on this number in terms of breakup in our four festival-related states and other states where there is a lesser dependency on festival. Can you break up this number of like how other states have performed where there is a lesser dependency on such a state?

Aakash Agarwal, CEO

So, I won't have that number on hand, but I can tell you that almost 260 of our stores are Puja Impact stores, where there is an impact of Durga Puja, and it ranges from about 30 days before the festival to about 15 days before the festival, and that is why we always give a normalized SSG whenever there is a festival shift.

Vaibha, Analyst — Hightong Securities

Understood. And related to this, how would we are performing in Q3? Can you give some more color? How has the October fared so far? And how are the initial traction has been in November? And what kind of efficiency do you expect to post in Q3? And you also have cut your guidance to 5 to 7% change flow stage growth after the Q3 business update. Do you foresee now with the Q3 demand to surpass this rider in FI27?

Aakash Agarwal, CEO

So, you need to understand that already six months of the year had passed, and in the first six months, our SSSG calendar basis was minus 3.7%. So, even if we achieve the target that we had set initially of 8-10% for the rest of the year, then the whole year SSSG would be 5-7%. So there was no change in guidance per se. It was just because the first six months of the year was a bit muted. That is why the whole year guidance changed. But looking at October, so if you look at calendar to calendar, then of course, it's a double digit SSG growth. But if you look at period to period, it is again a flat SSG growth. But quarter three, winter is a big, big part of quarter three. So and Diwali is also still pending. So I think we'll be able to comment more and give more color by the end of November or around 15 December. It all depends on how the winter goes.

Vaibha, Analyst — Hightong Securities

But how has been the Pooja sales in October?

Aakash Agarwal, CEO

So if you look at calendar to calendar, it's more than a double-digit growth. But if you look at period to period, it's been flat.

Vaibha, Analyst — Hightong Securities

Understood. Perfect. Lastly, on the store addition, you mentioned that you will be adding 60 to 70 stores in H2 and focus on improving the performance of existing portfolio. I remember you were saying more than 100 diesel MOUs were signed for H2. So, is there a shift of some of the stores which are planned to be opened in H2 to the next year? That's how we look at it.

Aakash Agarwal, CEO

So, we have already opened about, I think, 18 stores out of those. Okay. And 60 to 70, we are going to open and I think the rest will be shifted to April because there are some project delays in some of the sites.

Vaibha, Analyst — Hightong Securities

And perfect. Thank you so much.

Aakash Agarwal, CEO

Thank you.

Operator

Thank you. Next question is from the line of Kushal Goenka from Mangal Kesham. Please go ahead.

Kushal Goenka, Analyst — Mangal Keshav

Yeah, hi. Thank you so much for taking my question. My first question was that, Akash, you have been mentioning that you want to be the best paymasters in the industry. So, my question is, if I need to compare two scenarios between keeping the money longer in the business versus paying the creditors early and getting better prices, can you please quantify the gross margin benefit will outpace the working capital requirement?

Aakash Agarwal, CEO

So, see, here it's not a very simple answer because when we are becoming the best paymaster or paying our vendors early, it's not just the benefit and gross margin or the discount that we get from our vendors. It's also the increase in on-time delivery, increase in the priority given to us by our vendors in terms of supplies, in terms of quality, which, you know, which gives you some factors which are, I would say, not quantifiable. That is why we always like to have some extra cash on the books, even if we have to borrow, so that whenever our vendors are in need, they can get any bill discounted, so that it helps them with their working capital, so that we always have a very high fill rate in our stores and our DCs. Because the opportunity loss of an empty shelf is a complete sale loss, basically. That is much, much higher than any interest cost that you'll be paying on the borrowings.

Kushal Goenka, Analyst — Mangal Keshav

Okay. So can you give any guidance on the credit days going ahead?

Aakash Agarwal, CEO

So I think, see, our average credit days is around 65 to 70 days. And whatever prepayment we do is completely dependent on the situation in that particular season or month. So whatever extra cash flow we generate, we give the prepayment. So it should be between, I would say about 45 to 65 days, the credit days, depending on the availability of funds.

Kushal Goenka, Analyst — Mangal Keshav

So it might also reduce going ahead also.

Aakash Agarwal, CEO

Correct. If we have extra cash on the books, we will always pay our vendors earlier when their bills are due. Okay.

Kushal Goenka, Analyst — Mangal Keshav

And my second question is, Akha, is that you have been promising to include your co-team members of six to seven people since the last two quarters, and I have not been able to get that information. I tried to search the annual report also, and I'm not sure if it's mentioned there. So it would be great if you could mention it here, the names and roles. And also, second part to that question is, are we actively looking for more CXOs because we do have an ambitious target to reach 2,500 stores? So how are we planning to strengthen the core team?

Aakash Agarwal, CEO

So what we do now is we keep a probation of at least six months whenever a senior key managerial person joins the organization before we, you know, set it out, send it out to the investors in our deck because we want to see the culture of it. We want to see if they're the right fit for the organization. But definitely a lot of them have passed those six month benchmark and we will share it on the presentation. And yes, we are on the look for more CXOs, looking at the path that we are on. We are always on the lookout for good professionals, experienced professionals who can help us in our journey.

Kushal Goenka, Analyst — Mangal Keshav

But if you could just let me know, like, some people who are there with you, say, like, since last five years, if you can mention their names or their roles, who are closely working with you.

Aakash Agarwal, CEO

Sure.

Kushal Goenka, Analyst — Mangal Keshav

We will add that to the presentation. You will get it. Sure. Please, if you can do that, I've been asking you since the last two quarters. Thank you. Thank you so much, and best of luck. Thank you.

Operator

Thank you. Next question is from the line of CA Vikas from Sede and Alpha. Please go ahead.

CA Vikas, Analyst — Sede and Alpha

Hello.

Aakash Agarwal, CEO

Yes, sir, you're audible.

CA Vikas, Analyst — Sede and Alpha

Yes, thanks for taking my question, sir. My question on guidance side, like FY27 guidance, we guided around 50% growth. So, in actuality, we already achieved around 42% and about 28% in quarter two. To reach that 50% growth guidance, so we need to do as to around 56% growth. So do you still maintain this 2% growth guidance or is there any changes? Or how much of H2 growth do you expect from your store and how much of existing stores? That was my question.

Aakash Agarwal, CEO

Yes, I think we're not changing our guidance in terms of revenue growth. I think we should still surpass the 50% guidance that we had for the whole year. And talking about old store versus new store, in the second half of the year, I think old stores should grow at 7-9% SSG and new stores will be the rest. So if the second half of the year, we are expecting almost 60% sales growth. So, 7 to 9 will come from old stores, the rest will come from new stores.

CA Vikas, Analyst — Sede and Alpha

Okay, sir. So, the company opened 106 store in H1. So, are you on track to open 172 to 100 store for full year?

Aakash Agarwal, CEO

Correct. So, I think we already opened 115, 116 stores, and we're going to open 60 to 70 more.

CA Vikas, Analyst — Sede and Alpha

And for FY28, do you still expect revenue growth around 50% or any other

Aakash Agarwal, CEO

guidance? So for FY28, our current guidance would be anywhere between 120 to 150 stores. It will completely depend on the rest of the year's performance, how we change that target.

CA Vikas, Analyst — Sede and Alpha

Okay, okay. Thanks for taking my questions.

Operator

Thank you.

Operator

Thank you. Next question is on the line of Ankush Agarwal from Search Capital. Please go ahead.

Ankush Agarwal, Analyst — Search Capital

Yeah, hi, Akash. Thank you for taking that question. So, Akash, firstly, on this SSG, like, even if we exist for the festive shift, like, the SSG is 0.5%, and then we have also made this comment that calendar to calendar, like, period to period, it is still flat when you make the comment on Durga Puja. So, I wanted to understand what is more happening, like, it's not just the festive shift that has impacted the SSG, I think underlying, something else is also happening. So, have you sort of done any analysis as to what is happening? Maybe some of the old, newer store forwards that you would have added in last one and a half years, they are not giving the same level of throughput. So, wanted to know more of this.

Aakash Agarwal, CEO

Yeah, so we checked the data, nothing stands out in particular. You know, if you look at ABV is maintained, ASP hasn't changed a lot. If we looked at state-wise SSG, we looked at cohort-wise SSG. So, the slowdown on the delta is throughout. And when we did competitor benchmarking also, we found out the same results. So, it's hard to put a particular factor to that because nothing stands out from the data.

Ankush Agarwal, Analyst — Search Capital

Okay, so in light of this, assuming that SSG remains muted going ahead, how are we looking to sort of adjust our growth ambitions? Because again, then, if we continue to aggressively add more stores and down the rent, again, in fact, the overall profitability of the business, because at 7-8% SSG, we were adding 50-60% store, so that was working out, but I think at lower SSG, that might not be sustainable. So, are we looking to sort of assess that growth ambitions in light of the slower efficiency?

Aakash Agarwal, CEO

Yeah, correct. So, if this trend continues to the third quarter, then next year, we'll only open 100 stores, which initially the target was 150 to 200. Okay. Okay.

Operator

Okay. That was all. Thank you. Thank you.

Operator

Thank you. Next question is from the line of Owned Cars from Shree Investments. Please go ahead.

Onkar, Analyst — Shree Investment

My question was regarding the depreciation in this quarter. Is this fact continuing in the Q3 and Q4 as well? Sir, your voice is not clear.

Aakash Agarwal, CEO

I lost you.

Onkar, Analyst — Shree Investment

Sorry. Am I audible now?

Aakash Agarwal, CEO

Yeah, much better.

Onkar, Analyst — Shree Investment

Yeah, my question was regarding the depreciation in this quarter. So, will this continue in the Q3 and Q4 or there will be slight reduction going forward?

Aakash Agarwal, CEO

No, it's going to continue now because the base of the stores have increased. So, the depreciation is going to continue in the 3rd and 4th quarter. Okay.

Onkar, Analyst — Shree Investment

So, overall speaking, have you seen any demand slowdown overall or just that? Something else, because you yourself mentioned that there are no particular reasons you can see for the reduced SSHG.

Aakash Agarwal, CEO

Yeah, but I've also always mentioned that, you know, the macroeconomic, the demand scenario only has like a delta of plus or minus 5%. So I think definitely we have performed less than our expectations. But again, we are hopeful for the winter season. But in the last three months, definitely we saw some sort of a demand slowdown.

Onkar, Analyst — Shree Investment

In this store expansion, which you have said, of 100 stores, if things don't work out, then what will be the sales figure for equipment? Will it be a 50% kind of growth, or you have to lower it down again?

Aakash Agarwal, CEO

No, so if we open only 100 stores, then the sales growth will also reduce from 50%.

Onkar, Analyst — Shree Investment

So that should be how much then? If at 150 to 200, if it would be about 50, then at 100, how much is it?

Aakash Agarwal, CEO

I think it would be around 35%, 35 to 40%.

Onkar, Analyst — Shree Investment

Okay, and that, when, approximately at what time you will decide that, like, you have to reduce the store expansion?

Aakash Agarwal, CEO

I think it will be at the end of the third quarter. How we do in the third quarter, because this is the biggest quarter for us. It has a lot of festivals plus the winter season, so we'll get a much better idea at the end of the third quarter.

Onkar, Analyst — Shree Investment

And can you mention the Matchless Stores SSHG for the first half?

Aakash Agarwal, CEO

We don't give that breakup out, but maybe from next time we'll start giving that all also.

Onkar, Analyst — Shree Investment

For the next half, you are mentioning that you will be growing that around 7% to 9%, right?

Aakash Agarwal, CEO

That's our target, yes.

Onkar, Analyst — Shree Investment

Oh, yeah, but I mean, since you are mentioning for the next second half, at least you can give for the first half, right?

Aakash Agarwal, CEO

You're talking about actual SSHG for old versus new, right?

Onkar, Analyst — Shree Investment

Correct, correct. For the mature stores, you said you will be doing around 7% to 9%. So I was asking you can share the data for the SSHG of mature stores for the first half.

Aakash Agarwal, CEO

That's what I'm saying. I don't have it on hand. Maybe we'll share it from the next time.

Onkar, Analyst — Shree Investment

Okay. Okay. All right. Thank you.

Operator

Thank you.

Operator

Thank you. Next question is from the line of Amish Kanani from Novice Investment Managers. Please go ahead.

Amish Kanani, Analyst — Novice Investment Managers

Yes, sir. Maybe the question is asked, but, you know, just I was wondering if there are any nuances to pick up, one in terms of, you know, festive season versus winter sales, are we, you know, kind of seeing any different trends and, you know, whatever sales number growth that we have had for the month of November, if it can give us some sense of, you know, what is kind of affecting the sentiment. And, you know, what are we doing to see that, you know, it may not affect us for the rest of the months, especially the November, December, and January, sir.

Aakash Agarwal, CEO

I already mentioned about Durga Puja. Durga Puja period to period was flat. But what we are seeing, the early trends of winter, we are seeing a very positive uptick in demand and sales. But it's too early to call. But in terms of preparation, like I already mentioned, you know, our winter fill rate is almost 20% better than last year because a lot of goods were received late. So we are much better prepared for the winter season this year. So hopefully this trend continues through November and December, and we can get back on track.

Amish Kanani, Analyst — Novice Investment Managers

And sir, about the pricing trend, you know, the inflation and, you know, pass-through of inflation. Is it something which is run? What is the actual trend? And have we passed on the inflation? And that's the reason why, you know, we are seeing this kind of a, you know, softer trend or anything to read there and update us what the average inflation and how much is passed.

Aakash Agarwal, CEO

Yeah, so there was a rise in raw material prices, and we have increased the MRPs for those products. But if you see the ASP, the ASP has actually come down 3% in the first half of the year. So how we manage that is by a better product mix. So if the premium and super premium contribution was 30% for a particular category, because the prices are increasing, we increase the options in value and economy. So overall, for the customer, in terms of price points, it doesn't change much. And their average basket size, it doesn't change much. So, I don't think that has an impact on the sales currently.

Amish Kanani, Analyst — Novice Investment Managers

Sure. And the last one on the sales, you know, average sales per square feet, which has come down to a low of 700. You know, we have been targeting and old stores are getting 2,000. Anything that you can give us, you know, about, say, last one, two months, new store is largely probably affecting this. So are we, you know, kind of, is there any trend that we are quickly reaching there, at least, say, 850 plus? And whether, you know, that is affecting our EBITDA margins. So, any sense on the second half EBITDA margin, because of slightly lower, you know, average sales per square feet, and, you know, the new store may take some time to scale up, because of which we need to worry on the margins, operating margins, sir.

Aakash Agarwal, CEO

So, you know, new stores, historically, we've always seen they take about, you know, two to three years to mature. But because the first half was a bit muted, maybe that maturity period for our new store that we opened in FY26 has increased to, sorry, in FY25 has increased from 2 to 3 years to 2.5 to 3.5 years. But again, it's too early to call and we'll only find out how those new stores keep performing and keep ramping up because the new stores start at about 35 to 40% lower than our mature stores PSF. And that is what brings the company level PSF down. But if you look at EBITDA margins, even with the Durga Puja shift, our EBITDA margins, even pre-India has gone down by only 0.2%. Because we are getting operating leverage, we've been able to increase our gross margins by lesser discounting, better product mix. So those things are offsetting the lower per square feet from new stores.

Amish Kanani, Analyst — Novice Investment Managers

That's heartening to note. Thanks and all the best, sir.

Operator

Thank you. Next question is from the line of Avinash from MOSL. Please go ahead.

Avinash, Analyst — MOSL

Hey, good afternoon, sir. I just want to double click on this gross margin only. So, if I look at for this quarter, the full price sales were actually down, if I look, YOY to 91%, and still there is a 300 bucks of margin improvement in an inflationary scenario. So, how should we see this? Is this entirely because of the faster payments to the vendors, or how should we read this for the full year?

Aakash Agarwal, CEO

So there are three things here. One, we give a marketing offer as a bill discounting, sorry, a bill buster offer to our customers that happens during the share hour. So that happened in September last year, but that campaign will happen in October this year. Second, the major part is the better, lesser discounting because if you see the quarter one numbers, our gross margin was 1% less because of adhik maas, we had to start discounting earlier Good morning, everyone. And when you talk about full price sales, it only gives you the quantity of goods sold at discount or sold at full price. It doesn't give you the depth of discount that you have given. So you can have the same full price sales in terms of quantity, but maybe the average discount that we gave last year was 50%, whereas the average discount that we gave this year is only 30%. So that increases gross margin.

Avinash, Analyst — MOSL

Okay, got it. And generally, when I am looking at the apparel companies are facing 5-6% kind of RM inflation. So, how are you tackling this and what should be the margins for the full year?

Aakash Agarwal, CEO

So, like I already mentioned, what we are doing is we are focusing more on blended fabrics rather than 100% cotton fabrics. So, we are changing the product mix in a way that my AASP doesn't change and the value proposition to the consumers don't change. But of course, all the core products, everything that we sell in quantity, the prices of that in terms of our cost has increased from anywhere between 3% to 7%. So we have increased the MRP because we are already the lowest margin retailer. We can't absorb that kind of price increases in our margin.

Avinash, Analyst — MOSL

Okay. So, on a full-year basis, margins, how should it reflect gross margins?

Aakash Agarwal, CEO

It should be between 29% to 30%.

Avinash, Analyst — MOSL

Okay. Okay. Got it. And the second question is coming to the inventory. See, I understand there's a fixed shift component as well, but if you look at SPI 26 end, we have a higher inventory because you are ramping up the stores and you added 100 stores in the pasta. Now, the inventory should either be stable or improve from that level site, so I can see a further increase in the absolute inventory despite the outlook for the storage is coming down.

Aakash Agarwal, CEO

So, but if you look at the closing retail space area, that has increased by almost 1 million square feet. So, how can absolute inventory go down from March to here? So, three things happen at the end of September quarter. So, you are ramping up for winter season. So, all your winter goods are coming into the warehouse. You are ramping up for the festival season. So, all your festive goods are in the warehouse. And you are planning for the 60-70 stores that you are going to open in the second half of the year. So that is why if you look historically, always the inventory in terms of days and levels is always highest at the end of September quarter.

Avinash, Analyst — MOSL

No, okay. So, this is only because of the festive stocking that you have seen an inventory built up right now?

Aakash Agarwal, CEO

No, and the 1 million square feet that we've already opened. So, you need to understand at the end of March, we had this inventory for the 1 million square feet that we were going to open. Now, those stores are already open. So, you already have that inventory in-house. Plus, you will have the festive inventory, winter inventory, and the 70 stores that you're going to open in the second half of the year.

Avinash, Analyst — MOSL

Okay, got it. And the last question is regarding the debt and the cash flows. So, debt has again started to pile up to 520 crores right now. So, what's your sense on the cash flows?

Aakash Agarwal, CEO

So, because we pre-poned our growth, and we opened 106 stores in the first half of the year, that is why we needed that cash flow earlier, and it also includes the prepayment that we do to our vendors. But now, going forward, as and when, we are going to open lesser stores in the future, so this level should come down.

Avinash, Analyst — MOSL

What is the comfortable position of the date that you are ready to take? Like, this 500 close to it should be, say, suppose, I'm not asking immediately, but, say, suppose, two years down the line.

Aakash Agarwal, CEO

So, I think any level below 0.5 in terms of debt-to-equity ratio is good for our business. It's healthy. As long as, you know, you have enough EBITDA and profit to cover your interest payments.

Avinash, Analyst — MOSL

Got it. That's it for my credit. I'll do it. Thank you.

Aakash Agarwal, CEO

Thank you.

Operator

Thank you. Next question is from the line of me, Mehta, from Integrity Ventures. Please go ahead.

Mehta, Analyst — Integrity Ventures

Yeah, hi, Akash. Very congratulations on a good set of numbers. You know, just a conclusion on the PSF side. So, if I'm not wrong, our starting PSF for new stores was around 700 on 730 levels. But we reported the PSF of 700 for this Q2. So, you know, what kind of starting PSF we have and why, you know, the number have fallen from 938 rupees in the last quarter to, you know, 700 kind of level. It's just because of the new store addition or, you know, anything to read on that.

Aakash Agarwal, CEO

So whenever we talk about PSF, it's always the last 12 month average. When we talk about that new stores are doing about 720, 730, old stores are doing about 1100 rupees per square feet. So if you look at historically also, whenever there is no festival in quarter two, quarter two PSF is almost 40 to 45% lower than year average.

Mehta, Analyst — Integrity Ventures

Got it. So, but, you know, our starting PSF for new stores is around 720, 730, and we are lower than that. So, you know, are those stores doing much lower than the 700 kind of level? Because mature stores would be doing around 1100 kind of range. So, you know, they are doing much lesser on the new store side.

Aakash Agarwal, CEO

So that's what I'm explaining. If you look at just new stores, if the year average is 720, if you reduce 40% from that, you come with what I think around 450 rupees per square feet for quarter two. And for old stores also, if the year average is 1100, and you reduce 40% from that, you get at 700 rupees per square feet of PSF. So, you are only looking at quarter 2 in isolation, which is the wrong way to look at it. Our last 12-month average for newer stores is still above 730-740 rupees per square feet.

Mehta, Analyst — Integrity Ventures

Got it. And with, you know, festivities and wedding demand and, you know, the winter collection going live for this quarter, this should jump for the quarter 3. Correct. Got it. Got it. Yeah. Thanks for the, you know, thing on this particular thing. And all the guys for the coming quarters. Thank you.

Operator

Thank you. Next question is from the line of Nikhil from Bliss Homes. Please go ahead.

Nikhil, Analyst — Bliss Homes

Hi, Akash. Looking at the October and starting November screen data you have so far in Q3, can we expect Q3 to be V2 Retail's best quarter ever?

Aakash Agarwal, CEO

Yes, Q3 will be V2 Detail's best quarter ever. In terms of revenue, in terms of profitability, correct. Okay, that's it from my head. All the best. Thank you.

Operator

Thank you. Next question is from the line of Deepak from Wealth with Wisdom. Please go ahead.

Deepak, Analyst — Wealth Wisdom

Hey, hi, Akash. Just wanted to get your view on if you have done some deep dive on in terms of... New customer acquisition, was there a call or the existing customers? I'm sure you would be maintaining that when you register a consumer or let's say invoice a customer. So how does it look like in terms of, can you give some color on that?

Aakash Agarwal, CEO

Yeah, so we always look at CRM data and what we have seen in the last two to three years, I would say, so the average frequency of our customers, repeat customers used to be almost five, five and a half months, which has reduced to just 4.4 to four and a half months now. And for our mature stores, the repeat customer sales has increased from 55% to almost 70-70%. And customers who come back within one year has also significantly improved. There's an improvement in that percentage by almost 500 basis points. So all these metrics are improving. But in the second quarter, again, like I said, there's no number that stands out to say, oh, suddenly the repeat customers went down or the new customer acquisition fell down. There is no number that stands out and tells us, okay, this is the problem or this was the issue. So I think it is a mix of everything, because like ABV was 1% down, and footfall was 3% down, and I think it's a mix of a lot of factors together, but nothing stands out significantly saying that, okay, this is the reason why we're seeing a little dip in sales.

Deepak, Analyst — Wealth Wisdom

So you mentioned about recency, you mentioned about frequency, and what about the monetary value, as in the... Uh, the existing customers, uh, how has been their bucket size? That's also in line.

Aakash Agarwal, CEO

So we don't, we don't track lifetime value, but what we see is average loyal customer for us spends around 2200 to 2500 rupees annually with us.

Deepak, Analyst — Wealth Wisdom

I understand. I understand. I understand.

Aakash Agarwal, CEO

Because our cost of acquisition is next to nothing because our marketing cost is less than, I would say 0.5%.

Deepak, Analyst — Wealth Wisdom

Yeah, yeah, yeah, yeah. So basically what we are looking at, so let's say if I have to identify the problem, spell out the problem correctly with respect to last quarter because, you know, a lot of investors are, you know, kind of taken aback by the numbers because they were never in the habit of, you know, using the numbers going down from V2. So, if I have to identify the problem correctly, the problem would be in terms of few percentage points here or there, right? So, in terms of, you said, footfall has gone down by, let's say, 3%, right? And 1%, what was that, Rimal? BV, average bill value. Average bill value. So, that would be the kind of total impact, right? Plus the festival impact.

CA Vikas, Analyst — Sede and Alpha

Okay.

Avinash, Analyst — MOSL

Okay, okay.

Deepak, Analyst — Wealth Wisdom

Any other nuances which you want to share, which you would have identified using data analytics?

Aakash Agarwal, CEO

Nothing significant, but yeah, definitely there were some categories where the on-time delivery was really poor, so that is why the fill rates were not up to the mark at the stores. So those categories were degrowing, obviously, higher than the others. But nothing too significant to explain 5% to 6% downfall in sales.

Deepak, Analyst — Wealth Wisdom

I understand. And one last question, Cashflow, let's say. So your merchandise sells at a very economical price, right? In fact, all your trends and, you know, your Westside and other stores, their pricing is way above yours, right? Who are your actual competition in terms of same price?

Aakash Agarwal, CEO

So, see, there are two direct competitors. One would be, obviously, the unorganized retail, the local warm-and-pop stores. They are selling a very similar price point. And the second tier would be the organized players in this space. There are more than 20. So, there is V-Mart, Style Bazaar, CityCart, Bazaar Kolkata, M-Bazaar. So, there are many players. And a lot of those players have more than 100 stores now. So, this is the second tier of competition. So, these are the two main direct competitor retailers to us.

Deepak, Analyst — Wealth Wisdom

On a like-to-like basis, for example, Akash, you have a lot of presence in Bihar, Odisha, Jharkhand, and all these places, right? While, let's say, a V-Mart would have presence spread across Pan-India, more in South, or let's say, I mean, New York. In terms of your geographic presence, you are more towards the economic section, right? So benchmarking that Vmart with you would also not be appropriated because the Pooja impact does not impact, I mean, does not impact them that significantly as it impacts you, right? So any player which is, you know, so let's say you would have compared those players where the Durga Pooja impact is high, right? Any stock differentiation or any insight which came out of, let's say, benchmarking?

Aakash Agarwal, CEO

Like, we look at all retailers the same now. We are also present in 25 states. So we also look at ourselves as a national-level retailer. So out of 430 stores, 250 odd stores are, you know, Pooja impacted. But now our stores are also pretty spread out. So, whenever we did the benchmarking, we saw, you know, still in most of the locations, our per square week sale is at least 30% higher than our closest competitor. Still, the most footfall is in our stores. You'll find most customers in our stores. And I would say we still have the best offering in terms of variety, number of options, and pricing. So, I think we still have that USP, we still have that edge, we still have that competitive advantage.

Deepak, Analyst — Wealth Wisdom

Oh, no, no, your business model is the best that I understand. Okay, okay, I don't want to stretch it anymore. Thanks, thanks, Kai, for sharing those insights, and all the best. Thank you.

Operator

Thank you. Next question is from the line of Vaibha from Hightong India Securities. Please go ahead.

Vaibha, Analyst — Hightong Securities

Hi, thanks for the follow-up. My question was on gross margin. We mentioned that last year in Q2, we had run this billbuster offer ahead of Deshira. So this year it will be in Q3. Would that impact our gross margin in Q3 because of this?

Aakash Agarwal, CEO

So, I think we'll still be able to maintain it in Q3.

Vaibha, Analyst — Hightong Securities

Understood. And related to this, have we received any benefit of price hikes in Q2 or price hikes could start getting reflected from Q3 onwards? And what is the quantum of price hikes that we have taken so far and going forward any more price hikes that you have planned?

Aakash Agarwal, CEO

We've already taken the price hikes, but there is no benefit from the price hikes because we're maintaining the gross margins. So, whatever cost delta we got, we are maintaining those gross margins.

Vaibha, Analyst — Hightong Securities

What is the range of prices taken so far?

Aakash Agarwal, CEO

So, I think the hike in cost was around 3 to 7%. So, to maintain gross margin, we like to increase MRPs by 5 to 10%.

Vaibha, Analyst — Hightong Securities

Understood. And you don't plan to take any more hike going forward?

Aakash Agarwal, CEO

It all depends on the raw material prices. So, we want to maintain our gross margins. So, if there are further price hikes in raw material prices, then we will have to take price hikes.

Vaibha, Analyst — Hightong Securities

Understood. And any guidance for the foliar in terms of pre-indiced EBITDA margins? Should we expect any sort of expansion for the foliar?

Aakash Agarwal, CEO

Uh, after opening, uh, 170 to 190 stores in the whole year, I don't think we'll be able to expand the EBITDA margin. It'll be a great job even if we maintain it. So, like we've always mentioned, I think, uh, we would be targeting a pre-India's EBITDA margin of 7% to 8% for the whole year.

Vaibha, Analyst — Hightong Securities

Understood. Uh, just, uh, on the SSG, you had mentioned that you have seen a double-digit growth, uh, in this, uh, October. So, this is you are talking about October year-on-year basis, right? And you said slightest for a period. What did you mean by that?

Aakash Agarwal, CEO

So, because Durga Puja moves from September to October, so when you look at calendar basis, October to October is showing a higher growth. But when you match it to period to period, that is Dashera to Dashera, it's flat.

Vaibha, Analyst — Hightong Securities

Understood. So, if you have done a year on a calendar year basis double-digit growth in October and our base is also favorable, we had posted around 2% SSG last year. Can we expect double-digit growth to sustain Q3 and then normalize back to our high single-digit growth in Q4?

Aakash Agarwal, CEO

Again, we always like to focus on normalized SSG that is period to period and for that our target is 5 to 7% for Q3 now.

Vaibha, Analyst — Hightong Securities

Perfect. Thank you. Thank you.

Operator

Thank you. Next question is from the line of Onkar from Shree Investments. Please go ahead.

Onkar, Analyst — Shree Investment

Earlier, you mentioned that around 13.5% to 4.5% EBITDA margin you will be doing for the entire year, right?

Aakash Agarwal, CEO

That is post-Indias. We like…

Onkar, Analyst — Shree Investment

Yeah, you can ask. Yeah, first half you have done around 13.6% and quarter two you have done around 13.3% and you are guiding for around 13.5% to 14.5%. So in order to make it to the upper end of the band, I mean, do you foresee that kind of margin expansion pre-index in order to achieve that guidance?

Aakash Agarwal, CEO

So, we never guide for post-Indias numbers. That's why we always guide for pre-Indias. So, definitely the pre-Indias EBITDA margin for the second half will be better than the first half because the bulk of the profitability comes in the third quarter. So, I think the first half pre-Indias EBITDA margin is about 7%. So, the next half should be at least 8%. So, the full year pre-Indias EBITDA margin will be more than 7.5%.

Onkar, Analyst — Shree Investment

So, for the quarter 3 and quarter 4, do you expect the profit growth or the EBITDA growth to be higher than the sales growth?

Aakash Agarwal, CEO

Again, I don't know exact number, but for the whole year, again, if you look at the whole year in picture, the revenue growth should be more than 50%, and the profit growth also should be more than 50%.

Onkar, Analyst — Shree Investment

Okay. So, either like equal rate or like better rate slightly.

Aakash Agarwal, CEO

I lost you there, sorry.

Onkar, Analyst — Shree Investment

I was saying, you mentioned that it should be at least equal or slightly better than that, right?

Aakash Agarwal, CEO

Correct.

Onkar, Analyst — Shree Investment

All right, thank you.

Operator

Thank you.

Operator

Thank you. Next question is from the line of Kushal from Mangal Keshav. Please go ahead.

Kushal Goenka, Analyst — Mangal Keshav

Hi, thank you so much for giving me the follow-up. Akash, so you mentioned that there is some slowdown in demand, which is an external factor. My question is that an anti-fragile management usually don't wait for external factors to get better, but do internal changes like tinkering or making the internal systems better, changes that lead to generation of new demand. So anything that E2 is doing, because I have seen Ram's interviews, and I believe in his energy and story a lot, and just slowdown in demand should not let our vision fade away. So any thoughts on this? Thank you.

Aakash Agarwal, CEO

So that is the good thing about us. We never stop innovating or trying new things or experimenting, even when we are doing amazing. So even when we were getting 31% or 29% SSG, we were still working on 50 different projects to go to the next level. And even now, because see, one or two quarters doesn't define anything. What we are working on is the vision for the future, that is 2500 V2 stores. But definitely, we've always mentioned that our growth trajectory will completely depend on our performance. So if we see, because, you know, at the end of the day, your performance leads to the cash flows and the internal accruals that allow you to grow. And if we see that all the parameters, all the pointers, all the benchmarks are positive, then we accelerate more. And if we feel that, okay, there is something that we need to work on more and consolidate, then, of course, we take the foot away from the pedal. But again, even today, there are 25 different projects that are going on. So we completely went on live with Hub & Spoke. So all our stores are being replenished. Some are being replenished every day, and most are being replenished once in two days, which used to be once a week. So that has really simplified store operations. We have introduced a lot more fashion quotient in our assortment. So earlier, it used to be less than 20%. Now we're trying to take it up to 30%. Where things that come, you know, in trend only for maybe six months, we're trying to offer those designs at our stores to attract Gen Zs. And the biggest project that we've undertaken is application of AI. So what we're doing is making AI tools and AI agents that use OCR, that do the analysis themselves in terms of what attributes are selling, what attributes we should increase at what store, and we have completely moved our complete ARS system onto that as well. So this will keep evolving, and I think it will start giving us rewards and returns from next year onwards.

Kushal Goenka, Analyst — Mangal Keshav

That's great to hear. Just last thing, any color on the V2 cart e-commerce that you have launched recently?

Aakash Agarwal, CEO

So we did the pilot in two states. It's still going on. Again, it's a new, I would say, vertical. So there are some operational issues because at any given point of time, there are almost 35,000 pieces of inventory at any of our stores. And looking for one order or two order, one or two pieces of an article is becoming a little bit of a challenge. So we don't want unfulfillable orders. So we're trying to look for solutions, how to solve that, or only go launch with, you know, high depth articles or core articles, because we don't want to, I would say, compromise on customer experience. So, we're just doing tinkering and doing the last-minute checks, how we can make that better, and then we will, you know, add more states to that launch.

Kushal Goenka, Analyst — Mangal Keshav

But you plan to go full-fledged with this V2Cut?

Aakash Agarwal, CEO

Yes, correct, because it has no additional fixed cost for us. We're using our existing inventory at the stores, the technology cost is negligible, so it's all variable cost, so it always makes sense to add another channel to sell your current inventory on.

Kushal Goenka, Analyst — Mangal Keshav

Thank you so much and best of luck.

Aakash Agarwal, CEO

Thank you.

Operator

Thank you. That was the last question for today. I now hand the conference over to Mr. Aakash Akarwal, sir, for closing comments.

Aakash Agarwal, CEO

Thank you, everyone, for joining us on today's call. We hope we've been able to address your questions and provide greater clarity on our performance and outlook. Should you require any other further information or have additional queries, please feel free to reach out to Marathon Capital, our investor relations advisors, who will be happy to assist you. We appreciate your continued interest, confidence, and support. Thank you, and we look forward to speaking with you again.

Operator

Thank you. On behalf of V2 Retail Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.