Vishal Mega Mart Q2 EBITDA rises 4.4%, stock hits low

Vishal Mega Mart (

) reported Q2FY27 EBITDA of ₹412 crore, up 4.4% YoY. The stock fell more than 7% in two sessions and touched a 52-week low of ₹86.63 after the results. Vishal Mega Mart delivered revenue growth of 14% YoY to ₹3,727 crore, but the quality of growth came under scrutiny. Same-store sales growth was only 5.4%, indicating that expansion of the store network, rather than stronger demand from existing stores, drove a large part of the increase. The company added 26 stores during the quarter and now operates 844 stores across 582 cities. Management continues to target more than 100 store additions in FY27 and sees scope for a much larger network over time. What matters is the pressure on profitability. Gross margin contracted by 32 basis points as inflation and a weaker mix of higher-margin apparel sales affected earnings. Higher employee costs added to the squeeze. While management expects a festive-season boost in Q3 due to a calendar shift, investors will likely focus on whether margins recover alongside sales. The headline may miss another key issue. The stock is down about 34% in 2026, partly due to concerns around future stake sales by private equity promoters, who still own around 40% of the company. That ownership overhang remains relevant for investor sentiment, independent of operating performance. The premium-focused "Belong & Co." pilot is an interesting long-term initiative, but it is too early to assess its impact on earnings. What to watch next: Q3 same-store sales growth, margin recovery, festive demand trends, execution of store expansion, and any further promoter stake sales. View: At roughly 42x estimated FY27 earnings, stronger demand and margin improvement are needed to support the current valuation.