India Ratings has upgraded V2 Retail’s bank loan facilities to 'IND A' with a Positive outlook. The upgrade reflects strong operational growth, including a 63% revenue jump and improved leverage ratios in FY26. While the company's aggressive store expansion strategy signals momentum, investors should monitor its rising inventory days and working capital requirements as it scales operations.
V2 Retail Secures Credit Rating Upgrade to IND A
Revenue grew to Rs 3,067 crore in FY26; Net leverage improved to 2.2x.
Reader Takeaway: Strong operational scaling and asset-light model drive rating upgrade; rising inventory levels remain a key monitorable.
What just happened
India Ratings & Research (Ind-Ra) has upgraded the bank loan facilities of V2 Retail Ltd. The long-term rating is now 'IND A' with a Positive outlook, improved from 'IND A-'. Additionally, short-term facilities were upgraded to 'IND A1' from 'IND A2+'. This action pertains to aggregate fund-based working capital limits of Rs 175 crore.
Why this matters
This upgrade reflects the company's successful transition to an asset-light operating model and robust financial performance. In FY26, V2 Retail recorded consolidated revenue of Rs 3,067 crore, marking a 62.8% year-on-year increase. Profitability also strengthened, with EBITDA rising to Rs 455.5 crore and margins expanding to 14.85%.
The backstory
The company significantly scaled its physical footprint in FY26, adding 136 stores to reach a total of 381 stores across 225 cities as of June 30, 2026. This expansion was complemented by a strategic shift toward outsourced production, moving away from in-house manufacturing to optimize costs and focus on brand growth, which now constitutes 90% of revenue.
Risks to watch
The aggressive expansion plan—targeting 170 new stores in FY27 and 200 in FY28—introduces execution risk. Higher capital expenditure and potential pressure on cash flows are concerns. Furthermore, the working capital cycle has elongated, with inventory days increasing to 194 in FY26 from 154 in the previous year.
Context metrics (FY26)
- Revenue: Rs 3,067 crore (+62.8% YoY)
- PAT: Rs 162.1 crore (+125.1% YoY)
- Net Leverage: 2.2x (improved from 3.3x)
- Interest Coverage: 4.7x (improved from 3.8x)
What to track next
Investors should closely observe same-store sales growth and EBITDA margins as the company maintains its rapid store rollout. The ability to manage the widening working capital cycle will be critical for maintaining the current positive outlook on credit quality.