Vishal Mega Mart shares fall 7% after quarterly results on margin pressure

what happened

Shares of Vishal Mega Mart Ltd., a hypermarket store chain, fell as much as 7% on Wednesday, October 21, after the company reported results for the September quarter. Investors reacted to margin pressure compared with last year and a weaker same store sales figure, according to CNBC-TV18.

Revenue rose 14% year on year to 3,399 crore rupees from 2,981 crore. EBITDA came in at 412 crore rupees against 395 crore, a gain of 4.3%. The EBITDA margin narrowed by more than 100 basis points, to 12.1% from 13.2%. Net profit rose 3.9% to 158 crore rupees. Same store sales growth was 5.4%, or 9% on an adjusted basis. The company said the shift of festivals into the December quarter reduced that figure by 3 to 4 percentage points.

At the time of reporting, the stock was trading 5.9% lower at 88.87 rupees. It is down nearly 50% from its post-listing high above 150 rupees and is close to its IPO price of 78 rupees. The shares have lost 35% so far this year.

why it matters

For markets this is a single-company story, but it shows that revenue growth in Indian retail is not yet translating into profit growth. The sell-off, driven by lower margins and a steep drop since the IPO, may weigh on sentiment toward new retail listings.

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