Vishal Mega Mart margin falls as costs outpace revenue growth
Revenue grew 13.99% YoY, but faster expense growth cut operating margin by 1.11 percentage points and limited net profit growth to 3.66%.
Filed 21 Oct 2026, 13:03 IST · Vishal Mega Mart Ltd (VMM)
Key takeaways
- Vishal Mega Mart's consolidated operating margin fell 2.49 percentage points QoQ to 12.12% as expenses declined less than revenue.
- Revenue rose 13.99% YoY, but expenses rose 15.45%, narrowing operating margin by 1.11 percentage points.
- Net profit rose only 3.66% YoY to Rs 157.88 cr, while other income accounted for 18.17% of pre-tax profit.
Price around the results
Costs outpaced revenue growth in Q2FY27
On a consolidated basis, revenue fell 8.81% QoQ while expenses declined only 6.16%, causing operating margin to contract by 2.49 percentage points. Year on year, revenue increased 13.99%, but expenses grew faster at 15.45%, reducing operating margin by 1.11 percentage points. Operating profit therefore grew only 4.43% YoY, well below revenue growth.
Other income supported pre-tax profit
Other income contributed 18.17% of pre-tax profit, making reported earnings less dependent on operating performance. Interest expense rose 14.46% YoY and depreciation increased 13.48%, adding to the pressure below operating profit. The tax rate was broadly stable at 25.29%, down 0.18 percentage points YoY and up 0.09 percentage points QoQ, so tax changes did not materially flatter net profit.
Margin is above peers but below the recent peak
Vishal Mega Mart's 12.12% operating margin was 2.15 percentage points above the 9.97% median for the 20 Consumer Discretionary peers that have reported. The margin has been uneven: it rose to 16.49% in Q3FY26, fell to 13.64% in Q4FY26, recovered to 14.61% in Q1FY27 and declined to 12.12% this quarter. Q2FY27 is the lowest margin in the six-quarter trend shown.
Loyalty customers were central to H1 revenue
Management said approximately 95% of H1FY27 revenue came from loyalty customers. The company said its loyalty programme allows digital enrolment using only a phone number. Management also said customers can earn rewards in stores and redeem them online.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,399 cr | ₹3,727 cr | -8.81% | +13.99% |
| Other income | ₹38 cr | ₹33 cr | +15.84% | +90.24% |
| Expenses | ₹2,986 cr | ₹3,182 cr | -6.16% | +15.45% |
| Operating profit | ₹412 cr | ₹545 cr | -24.34% | +4.43% |
| Operating margin (%) | 12.12% | 14.61% | — | — |
| Interest | ₹47 cr | ₹46 cr | +1.86% | +14.46% |
| Depreciation | ₹192 cr | ₹185 cr | +3.48% | +13.48% |
| Profit before tax | ₹211 cr | ₹346 cr | -38.92% | +3.40% |
| Tax | ₹53 cr | ₹87 cr | -38.72% | +2.63% |
| Net profit | ₹158 cr | ₹259 cr | -38.99% | +3.66% |
| EPS (₹) | ₹0.34 | ₹0.55 | -38.18% | +3.03% |
Operating margin of 12.12% compares with a Consumer Discretionary sector median of 9.97% across 20 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -4.70% | -4.36% |
Volume on the results session was 4.83× 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 H1FY27 revenue came from loyalty customers.
New initiatives
- The loyalty programme offers digital enrolment using only a phone number.
- The loyalty programme allows customers to earn rewards in stores and redeem them online.
What to watch
- Whether operating margin recovers from 12.12% after the 2.49-percentage-point QoQ decline.
- Whether expense growth falls below the 13.99% YoY revenue growth rate.
- Whether other income's 18.17% contribution to pre-tax profit declines.