Vishal Mega Mart margin slips YoY as expenses outpace revenue
Sequential momentum improved, with revenue growth ahead of expense growth and operating margin rising 0.87 percentage points.
Filed 23 Jul 2026, 12:36 IST · Vishal Mega Mart Ltd (VMM)
Key takeaways
- Consolidated revenue grew +18.68% YoY, but expenses grew +20.04%, trimming operating margin by 0.21 percentage points.
- Net profit rose +25.57% YoY as the tax rate fell 0.12 percentage points, although other income contributed 9.58% of pre-tax profit.
- The stock fell -1.92% on the filing day and -3.59% the next session, against a 4.13% median absolute move after its six recent results.
Price around the results
Revenue momentum returned in Q1FY27
Vishal Mega Mart reported consolidated revenue growth of +18.68% YoY and +19.68% QoQ, while operating profit grew +18.37% YoY and +20.98% QoQ. The sequential improvement was helped by revenue growing faster than expenses, which rose +14.46% QoQ. This made Q1FY27 the strongest sales quarter since Q3FY26 in the reported trend.
Costs kept the YoY margin under pressure
Expenses grew faster than revenue YoY, narrowing operating margin by 0.21 percentage points; sequentially, the reverse occurred and margin expanded 0.87 percentage points. The margin path remains uneven rather than a straight decline: it moved from 81.17% in Q1FY26 to 79.28% in Q2FY26, 82.86% in Q3FY26, 80.09% in Q4FY26 and 80.96% in Q1FY27. Other income accounted for 9.58% of pre-tax profit, so reported earnings were not entirely operating-led.
Profit growth had support from tax and other income
Net profit grew faster than revenue YoY, helped by a 0.12-percentage-point lower tax rate and other income contributing 9.58% of pre-tax profit. Interest expense rose +12.62% YoY, while depreciation increased +16.59%, limiting the conversion of operating profit into pre-tax profit. Sequentially, the tax rate fell 0.27 percentage points and interest was almost unchanged, supporting the +54.10% increase in net profit.
Loyalty customers were central to the quarter
Management said its loyalty programme enables targeted promotions aimed at increasing cross-selling and up-selling. The company reported that approximately 95% of Q1FY27 revenue came from loyalty customers, indicating how central the programme was to the quarter's revenue base.
The market reaction was negative but within recent history
The stock declined -1.92% on the filing day and was down -3.59% the next session, with filing-day volume at 3.36 times its reference level. That reaction was negative but smaller than the 4.13% median absolute move after the company's six recent results, which were split evenly between three rises and three declines. Among 22 Consumer Discretionary peers that had reported, the company's 80.96% operating margin was 64.82 percentage points above the 16.14% median.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,727 cr | ₹3,114 cr | +19.68% | +18.68% |
| Other income | ₹33 cr | ₹25 cr | +35.15% | +94.94% |
| Expenses | ₹710 cr | ₹620 cr | +14.46% | +20.04% |
| Operating profit | ₹3,017 cr | ₹2,494 cr | +20.98% | +18.37% |
| Operating margin (%) | 80.96% | 80.09% | — | — |
| Interest | ₹46 cr | ₹46 cr | -0.19% | +12.62% |
| Depreciation | ₹185 cr | ₹178 cr | +4.46% | +16.59% |
| Profit before tax | ₹346 cr | ₹225 cr | +53.56% | +25.37% |
| Tax | ₹87 cr | ₹57 cr | +51.95% | +24.77% |
| Net profit | ₹259 cr | ₹168 cr | +54.10% | +25.57% |
| EPS (₹) | ₹0.55 | ₹0.36 | +52.78% | +22.22% |
Operating margin of 80.96% compares with a Consumer Discretionary sector median of 16.14% across 22 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -1.92% | -1.39% |
| Next session | -3.59% | — |
Volume on the results session was 3.36× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Approximately 95% of revenue came from loyalty customers in Q1FY27.
New initiatives
- The loyalty programme enables targeted promotions to drive cross-selling and up-selling.
What to watch
- Whether operating margin stays above 80.96% after the 0.21-percentage-point YoY decline.
- Whether expenses continue to grow slower than revenue, as they did sequentially at +14.46% versus +19.68%.
- Whether approximately 95% of revenue continues to come from loyalty customers.