Value fashion outperforms as analysts highlight V-Mart as top retail pick

India’s retail earnings season continues to underline a stark divergence between value fashion and the rest of the apparel and discretionary landscape, with two domestic brokerages, Nuvama Institutional Equities and Motilal Oswal Financial Services, flagging strong outperformance by value-focused retailers in the September quarter of FY26 (Q2FY26). 

 

The shift of the Pujo festive season to the second quarter, combined with structural tailwinds in Tier 2 and beyond markets, analysts believe, has reinforced value fashion as the most resilient and fastest-growing pocket of the sector. 

 

Brokerages have identified V-Mart Retail as a preferred pick on the back of superior same-store momentum, strengthened unit economics, and accelerating store expansion.

 

Value players gain from festive timing, eastern strength

 

According to Nuvama, sectoral earnings were a ‘mixed bag’ with apparel players delivering divergent results depending on portfolio mix, geographical presence, and exposure to value-conscious consumers. An early festival season sharply lifted footfalls and conversion in eastern markets, an important region for value fashion retailers. 

 

Companies like V2 Retail and V-Mart reported double-digit like-for-like (LTL) growth, at 23 per cent and 11 per cent respectively, benefiting directly from the timing-led demand bump. Nuvama noted that value fashion players with eastern concentration emerged as key beneficiaries, prompting both V2 and V-Mart to raise their full-year store addition guidance.

 

Premium apparel brands, however, posted more modest progress. Nuvama highlighted that while premium formats saw steady LTL growth, helped partly by store rationalisation, performance remained uneven. ABFRL’s Pantaloons delivered 7 per cent LTL growth, supported by heavier marketing spends, while its ethnic portfolio stood out with Sabyasachi recording 39 per cent LTL growth and TCNS 19 per cent. Arvind Fashion registered an 8.3 per cent LTL increase in its retail channel, and KKCL reported 9 per cent same-store sales growth. 

 

At the other end of the spectrum, Go Fashion continued to struggle with a flat SSSG for the tenth straight quarter, leading to scaled-down store expansion targets.

 

Nuvama also noted that Page Industries posted subdued volume growth of 2.5 per cent due to strategic inventory down-stocking by channel partners, while Trent’s fashion portfolio saw low single-digit LFL growth. Vedant Fashions reported slow revenue growth due to dispatch delays arising from the GST rate change, and MUFTI faced weak footfalls and a temporary supply-chain disruption linked to Bangladesh.

 

Across categories, the GST rate rationalisation late in the quarter created temporary supply-chain disruptions. Nuvama observed that several companies undertook wholesale destocking, delaying the full impact of GST cuts to the current festive quarter. Footwear players, meanwhile, continued existing demand patterns, with rate cuts yet to reflect meaningfully in Q3.  CATCH STOCK MARKET LIVE UPDATES TODAY

 

Motilal Oswal flags strong margins, network expansion

 

Motilal Oswal, in a separate sector update, echoes the outperformance narrative for value fashion, calling it the clearest growth engine within retail. 

 

The brokerage noted that value-focused players sustained strong double-digit revenue and SSSG in Q2FY26, aided not only by the festive shift but also by robust underlying demand driven by the ongoing unorganised-to-organised migration in smaller towns. It added that consumption-supportive policies, including GST rationalisation, income-tax cuts, and stronger rural liquidity from a favourable monsoon, have helped reinforce demand in the value segment.

 

Motilal Oswal highlighted that the four listed value fashion players posted an aggregate 33 per cent revenue increase in Q2, driven by nearly 20 per cent retail area addition and consistent double-digit same-store growth. Both V-Mart and Vishal Mega Mart continued to deliver strong growth, while Baazar Style and V2 Retail outperformed due to the festive timing boost. 

 

Strong execution and tight cost control also helped the segment expand pre-IND AS Ebitda margins by around 210 basis points (bps) year-on-year (Y-o-Y) to 6.4 per cent, leading to a near-doubling of aggregate pre-IND AS Ebitda for the quarter. Adjusted PAT for the group rose sharply to ₹160 crore, supported by higher margins, lower finance costs and improved working-capital management.

 

Store expansion remained a major growth lever, with the four listed players adding 109 net new stores in Q2, translating to a 24 per cent Y-o-Y rise. Motilal Oswal noted that both V2 and V-Mart have increased their FY26 store-addition guidance in response to strong demand visibility, while Vishal Mega Mart has also indicated an expansion-led strategy. Retailers are targeting white spaces in southern and western India while deepening presence in their core Hindi-belt markets. Despite aggressive additions, inventory discipline remains intact, with cumulative inventory days steady at around 87.

 

However, faster network builds moderated free-cash-flow generation, as working-capital requirements rose and capex increased by about 37 per cent year-on-year. Motilal Oswal expects elevated working capital and capex to continue as retailers remain focused on accelerated expansion.

 

Analysts stress that the broader demand outlook for value fashion remains constructive. Rising private-label penetration, better supply-chain efficiencies, and operating leverage from larger networks should support further margin improvement. 

 

Motilal Oswal reiterated ‘Buy’ ratings on both V-Mart (Target: ₹1,085) and Vishal Mega Mart (Target: ₹180), calling V-Mart one of its preferred picks across apparel and footwear retail, citing its blend of high-teen growth, margin expansion and attractive valuations. Nuvama also identified V-Mart as its top sector pick.

 

With consistent same-store momentum, stronger profitability drivers and upgraded expansion plans, V-Mart stands out as the common high-conviction idea, consolidating its position as a key beneficiary of India’s shifting value fashion landscape. 

Disclaimer: Target price and stock/sector outlook has been suggested by Motilal Oswal and Nuvama Institutional Equities. Views expressed are their own.