V-Mart's Agarwal: GST cut to 5% could lift affordable fashion, but input tax still bites
MD Lalit Agarwal says GST rationalisation from 12% to 5% could boost consumption among middle/lower-income shoppers, where 85% of products sell below ₹1,000 at an average ₹340. But he warns gains are capped unless 18% GST on inputs and services is also cut, and flags ₹100 crore in stuck refund credits.
What happened
V-Mart Retail · V-Mart MD Lalit Agarwal says GST rationalisation from 12% to 5% could boost affordable fashion consumption among middle/lower-income shoppers,
Key facts
- GST cut 12% to 5%
- average selling price ₹340
- 85% products below ₹1,000
- 70% sales from private labels
- ₹100 crore GST credits
- 18% GST on inputs/services
- market cap ₹6,006.83 crore
- shares down 16% over past year
Why this matters
The unresolved input-output GST mismatch and ₹100 crore in locked credits create a working-capital drag that could shape future capital allocation, store expansion pace, and any inorganic moves in value fashion.
What to watch
- GST Council notification on input/services rate alongside output cut
- Quarterly disclosure of refund credit balance and trend
- SSSG and volume prints in first post-cut quarter
- Gross margin vs ASP movement post price pass-through
- Peer commentary (Trent, ABFRL value formats) on inverted duty impact
- V-Mart to pass GST cut to MRP to capture volume rather than expand gross margin
- Escalate ₹100cr refund recovery with GST authorities and lobby via Retailers Association for inverted-duty fix
- Tighten working-capital management to absorb blocked input credit drag
- Highlight volume/SSSG narrative to investors to arrest share weakness