The market has a habit of rediscovering India’s middle class as if it were a fresh idea each time. In the last decade, that crown belonged to D-Mart — the grocery chain that turned frugality into a business superpower and made value buying sound glamorous.
Now, as India’s consumption story shifts from metros to smaller towns, investors are asking a familiar question again: Is the next D-Mart already in front of us, quietly expanding under the name Vishal Mega Mart?
Walk into any Tier-2 city high street and the evidence is hard to miss. A Vishal signboard, a modest façade and shoppers carrying plastic baskets.
It isn’t jazzy.
It doesn’t need to be.
Vishal’s stores have become the department store of middle India, a place where families shop not for brands but for bargains.
But this wasn’t always the case.
A second life under private equity
For anyone who remembers Vishal’s earlier avatar, that transformation is remarkable.
A decade ago, the retailer was struggling with poor inventory control and heavy debt.
That changed when private-equity majors Advent International and Carlyle Group bought control in 2018. They shut loss-making outlets, redesigned store layouts and brought professional discipline to everything from sourcing to logistics.
What emerged was a different beast.
A value retailer built for India.
Over the next few years, the results began to show. Vishal emerged leaner, sharper and far more focused on profitability.
Vishal ended FY25 with Rs 11,260 crore in revenue, Rs 688 crore in profit and a 14% operating margin, across 696 stores and 12.2 million square feet (sq. ft.) of retail space.
D-Mart, by comparison, clocked Rs 57,790 crore in FY25 revenue and Rs 3,290 crore in profit from 415 stores covering 17.2 million sq. ft., with 8% operating margins and 5.7% net margins.
Vishal has already overtaken D-Mart in store count. Yet it earns only about one-fifth of its revenue.
The reason is simple but revealing: Vishal runs smaller stores (≈17,500 sq. ft.) generating about Rs 9,000 per sq. ft. annually, versus D-Mart’s Rs 35,000+.
Scale in retail isn’t just about how many shops you open; it’s about how much each sq. ft. sweats.
Same philosophy, different engine
At first glance, the two share the same DNA. This includes relentless cost control; fast inventory turns and the belief that low prices drive high volumes. Yet under the hood, they run on different fuels.
D-Mart is a groceries-first engine where customers come for daily essentials. About three-fourths of its revenue comes from FMCG and food staples, making it a high-frequency, low-ticket business that compounds quietly every day.
Vishal, in contrast, derives around 44% of sales from apparel and 28% from general merchandise, leaving groceries and FMCG at about 28%.
That difference explains much of the revenue gap.
Grocery-led models like D-Mart’s churn inventory rapidly, with the same customer returning multiple times a month.
Meanwhile, Vishal’s apparel-heavy basket drives higher margins, typically in the mid-30% range versus D-Mart’s 12–14%, but slower rotation. You can postpone buying a shirt or a pant. But you can’t postpone buying rice.
So, while D-Mart thrives on frequency, Vishal thrives on variety. One sells necessity, the other sells affordability.
D-Mart’s online arm, DMart Ready, operates in 25 cities and earned ₹3,502 crore in FY25, still loss-making as it builds out logistics for its grocery-focused, high-frequency model.
Vishal’s digital network, smaller but more integrated, spans 670 stores across 445 cities and 10 million users. Here each order flows through a nearby outlet, reinforcing volumes and margins rather than chasing app-scale growth.
That focus on control runs deeper than logistics. It shapes what Vishal sells, how it prices and how it keeps its shelves full. This brings us to its biggest weapon: private labels.
The private-label advantage
Roughly three-fourths of Vishal’s revenue now comes from private labels. By owning what it sells, the company controls sourcing, quality and pricing while avoiding supplier mark-ups. That’s how Rs 199 jeans and Rs 99 towels still leave room for profit. Every rupee saved in procurement is a rupee passed to the shopper. And that keeps baskets full.
Stores are leased, not owned; sizes are modest (20,000–25,000 square feet); distribution is regional to cut freight and stock-outs; advertising is minimal. The model is built to be boring and that’s the charm.
That quiet efficiency has begun to show up in the numbers.
Q1FY26: Growth finds its rhythm
Revenue grew 21% year-on-year to about Rs 3,140 crore, while net profit rose 37% to around Rs 206 crore.
Operating margins expanded to roughly 15% from 14% a year earlier. Same-store sales grew by about 11%, while the company added 23 gross new stores (net 21).
As of June, Vishal operated roughly 717 stores across 472 cities, covering nearly 12.4 million sq. ft of retail space. Private labels now make up close to 76% of total sales, showing that the cost advantage is still widening. Management credited higher operating leverage and better merchandise mix for the margin improvement, rather than any dramatic shift in pricing.
This wasn’t a blockbuster quarter, but it was steady.
The fine print
Even steady stories have weak spots. For Vishal, the first is margin sustainability amidst rising rentals, wages and logistics costs mean operating leverage can only do so much. Gains ahead will be incremental, not dramatic.
Competition is another pressure point as apparel and grocery peers expand aggressively, bidding up rents and staff costs. Vishal’s counter is discipline: fewer stores, better locations and locked-in leases.
Private-label growth too may be nearing its ceiling. As three-fourths of sales are already in-house brands, growing further will be harder, especially in branded FMCG categories. Consumer sentiment adds another layer of risk as growth still hinges on new shoppers rather than bigger bills, signalling share gains more than a consumption revival.
Apart from this, promoter holding fell from 74.6% in March 2025 to 54.2% by June, after a block deal that boosted liquidity but raised questions on timing.
While none of this breaks the story, it shows how much vigilance is needed to keep the model steady in a business built on thin margins and big ambitions.
Future plans: beyond aisles and cities
Vishal’s next phase is about depth, not just scale. It plans to expand further into Tier-2 and Tier-3 towns with smaller-format stores, roughly half its current size, targeting populations of 50,000 to 100,000. The idea is to test markets quickly without heavy upfront costs.
Its quick-commerce arm already links 670 stores across 445 cities, serving around 10 million users. The goal isn’t to rival grocery apps but to extend its value offerings with same prices, shorter distances and faster delivery.
Private labels remain central. Apparel is fully in-house, but there’s room to grow in general merchandise and FMCG by improving design and brand perception rather than chasing volume.
By FY27, Vishal expects to reach about 900 stores, funding expansion mostly through internal accruals. In a sector often obsessed with scale, that restraint could be its quiet advantage.
Valuation and expectations
At current levels, the stock trades near 100x earnings, rich for a retailer with 6% net margins and Return on Equity (RoE) in low double digits. D-Mart, for comparison, trades around 101x earnings with net margins near 4.5% and RoE close to 14%.
Investors are effectively betting that Vishal can maintain faster expansion without losing cost discipline. If that balance holds, the rich valuations may prove sensible. But if not, the market will do what it always does and reprice the story.
In conclusion
The hunt for India’s next D-Mart may be the wrong question.
Vishal Mega Mart isn’t a copy; it’s a reflection of the same idea built on value, discipline and scale. Its execution has been steady and its opportunity large, but apparel and general merchandise follow a different rhythm from groceries.
Margins can rise faster, yet they can slip just as quickly.
For now, the market seems to get that. The stock shows confidence without hype.
Vishal may never be the next D-Mart, and maybe it doesn’t need to be. Sometimes quiet compounding is success enough.
Note: We have relied on data from throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
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