Back in 2011, V2 Retail rose from the ashes of Vishal Retail, a once-familiar name in India’s budget fashion scene. With a new name and a sharper focus, V2 quietly built its second act across small-town India. No influencer campaigns. No e-commerce blitz. Just one clear idea: affordable fashion for the growing middle class in Tier-II and Tier-III cities.
Fast forward to 2025, and V2 is no longer a recovery story; it’s a retail breakout. In a year when small-cap stocks swung wildly, V2 stood firm, clocking 62% revenue growth, a 159% jump in net profit, and 74 new stores. The stock is up over 2,000% in two years. But this isn’t just about momentum; it’s about a business model that’s finally working at scale.
By the numbers:
- Market capitalisation: ₹6,491 crore
- Total revenues (FY25): ₹1,884.5 crore
- Net profit (FY25): ₹72 crore
- Same-store sales growth (FY25): 29%
- Retail footprint: 189 stores across ~150 cities
What’s working: First, store economics. V2 has cracked the code on running profitable outlets in non-metro markets. Sales per square foot: a key metric in retail that shows how efficiently a store earns revenue, rose to ₹1,017/month in FY25 from ₹854 the year before. Average selling prices stayed affordable at ₹297, but the average amount each shopper spent per visit rose to ₹859, showing customers are buying more per trip.
Then there’s the product mix. Menswear brings in 41% of sales, followed by women’s, kidswear, and lifestyle accessories. Importantly, the company is turning over inventory faster, holding fewer unsold items for shorter periods. Inventory holding days dropped from 131 to 108 over the year, which improves cash flow and reduces markdown risk.
V2 is also reducing its reliance on discounting. Nearly 89% of products in FY25 were sold at full marked prices (called MRP sales), up from 87% last year. This is a big deal in value retail, where heavy discounts are often the norm. Full-price sales help maintain healthier gross margins, which stood at 29.3% this year.
Where’s the growth coming from: Geography. While many rivals are focusing on big cities, V2 has doubled down on smaller ones; opening stores in states like Bihar, Odisha, Uttar Pradesh, and Karnataka. Its presence now spans 150+ cities, many of which still lack organised retail options. This gives V2 a longer runway before market saturation kicks in.
At the backend, things are getting more streamlined. V2 uses job work units; third-party facilities dedicated to making its in-house designs in Noida and Bihar, which helps it control costs and quality. A 25-member in-house design team creates most of the styles, giving V2 more control over trends, production timelines, and margins. Its warehouse in Gurugram supplies stores weekly, keeping shelves stocked without overloading inventory.
Operational discipline is visible elsewhere too. The company managed to reduce rent costs per square foot, keep lease obligations under control, and improve cash collection cycles. For context, net working capital days—a measure of how long cash is tied up in operations—fell from 71 to 37, freeing up cash faster.
But it’s not all perfect. The stock trades at a steep price-to-earnings (P/E) multiple of 91—meaning investors are already pricing in a lot of future growth. Borrowings rose to ₹839 crore in FY25, and while the company is profitable, its average return on equity (RoE) over the past three years is still just 10%, lower than top-tier retailers.
There are also a few red flags. A ₹15 crore advertising advance paid to Bennett, Coleman & Co. in 2019 remains unadjusted, though the deal has been extended. Auditors also flagged that a reconciliation of fixed assets, essentially cross-checking physical assets with accounting records, is still pending since FY23.
Still, zoom out and the strategy holds. V2 isn’t trying to become a luxury label or an online darling. It’s building the foundational apparel brand for small-town India where organised retail is just beginning to take shape, and customers are looking for quality, trendy clothes at a price that feels right.
The bottom line: V2 doesn’t chase fashion fads. It delivers everyday wear, at the right price, in the right cities; again and again. If it keeps its operations tight and expansion steady, V2 might not just ride India’s consumption wave. It could quietly define it.
