6 February 2020 V-Mart recorded a strong sales/PAT growth of 21%/58% YoY (7% beat) in 3QFY20 amidst weak 2% SSSG due to the poor macro outlook, subdued festive season and muted pre-winter sales. However, we raise our FY20/FY21 EBITDA estimate by 14%/11%, on the back of its steady pace of store additions and strong cost optimization initiatives driving margin improvement. However, given the weak economic outlook and the stocks recent sharp rally, we maintain V-Marts revenues for 3QFY20 were up 21% YoY to INR5.6b (7% above est.), despite a weak economic environment and slowing consumer spending. Gross margin improved by 80bp YoY to 36.3%, led by supplier consolidation and efficient merchandise sourcing. Pre Ind-AS116, EBITDA was up 29% YoY to INR944m (16% beat), led by EBITDA margin improvement of 16.8% (up 100bp YoY). PAT at INR661m was up 58% YoY (22% beat), driven by higher sales and improving margins.