Avenue Supermarts Q4 Updates: DMart's Quarterly Stores Addition Surges To Highest In At Least Four Years

Avenue Supermarts Ltd. added 28 stores in the fourth quarter of the last financial year, the highest quarterly additions since it started reporting business updates more than four years ago.

The company's standalone revenue from operations rose 17% for the second straight quarter to Rs 14,462 crore, according to an exchange filing on Thursday.

As of March 31, the DMart retail chain operator has 415 stores across India. Between March 21 and March 31, it opened 17 new stores across Punjab, Maharashtra, Karnataka, Telangana, Madhya Pradesh, Tamil Nadu, Gujarat, Andhra Pradesh and Rajasthan.

In recent quarters, analysts have raised concerns over DMart’s same-store sales growth and store expansion in smaller towns. Citi Research, commenting on its previous quarterly results, noted that revenue per square foot has been impacted by an inferior product mix and store openings in non-metro locations. The firm remains cautious on the company's valuation, citing risks related to aggressive store additions.

At the same time, DMart faces increasing competition in the e-commerce segment and from quick commerce players. To maintain footfall and bill size, the company has expanded discounts across categories. Nuvama Institutional Equities had said in a report that this discounting strategy could put further pressure on margins, as the management prioritises market share over profitability.

Motilal Oswal noted that the competitive intensity in retail increased following recent fundraising by top quick commerce firms. While DMart's value-focused model is expected to co-exist with quick commerce's convenience-driven approach, analysts at Citi Research highlighted margin pressures due to a weaker general merchandise and apparel mix, higher discounting, and negative operating leverage.

Shares of Avenue Supermarts closed 0.88% higher at Rs 4,157.8 apiece on the National Stock Exchange before the announcement, compared to a 0.35% decline in the benchmark Nifty. The stock has fallen 6.79% in the last 12 months and risen 16.73% on a year-to-date basis.