DMart parent Avenue Supermarts Ltd. is set to announce its financial results for the April-June quarter on Friday.
Brokerages see the consumer staples space bearing the brunt of weak underlying demand, expecting a muted outcome on the top line of companies.
As per Bloomberg estimates, revenue for the June quarter is expected to rise 17.8% year-on-year to Rs 16,583 crore, compared to Rs 14,069 crore in the same period last year.
Ebitda is likely to increase 11% to Rs 1,354 crore from Rs 1,221 crore, while margins are expected to narrow to 8.2% from 8.7% a year ago. Net profit is seen rising 14% to Rs 883 crore for the quarter, up from Rs 774 crore in the corresponding period last year.
DMart Q1 Preview (Consolidated, YoY)
Revenue seen 17.8% higher at Rs 16,583 crore versus Rs 14,069 crore.
Ebitda seen 11% higher at Rs 1,354 crore versus Rs 1,221 crore.
Margin seen at 8.2% versus 8.7%.
Profit up 14% to Rs 883 crore versus Rs 774 crore.
HSBC Securities | Rating: Reduce | Target: Rs 3,500
Models eight store additions in the quarter, taking total count to 423.
Expects 4% rise in revenue per square feet, driving 18% yearly revenue growth.
Builds in 20-basis-point gross-margin contraction and higher opex due to competition.
Ebitda margin seen down 30 basis points annually to 8.6%; Ebitda up 14% to Rs 1,390 crore.
Profit after tax is expected to rise 10% on an annual basis.
Competitive intensity may pressure SSSG and margins.
Upside risks include stronger SSSG, faster store expansion, and deeper tier-2 presence buffering quick commerce threat.
IIFL Capital Services | Rating: Reduce | Target: Rs 3,800
DMart's revenue rose 16.2% year-on-year during the quarter, slightly below IIFL estimates of 18.5% growth.
Sales per store increased by 1.9% annually, falling short of IIFL's projection of 4% growth.
Ebitda margin is expected to contract by 65 basis points year-on-year to 8.3%, driven by continued pressure from higher operating costs.
Morgan Stanley | Rating: Underweight | Target: Rs 3,260
Morgan Stanley expects DMart's standalone revenue to grow 17% year-on-year in Q1, maintaining a similar pace as the previous quarter.
Same-store sales growth momentum seen in the second half of the last fiscal is expected to continue, though it may be tempered by geopolitical tensions in May and DMart's significant presence in northwestern states, along with a high base.
Consolidated Ebitda margins are projected to decline year-on-year to 7.8% in Q1, though improving from 6.4% in Q4.
Macquarie | Rating: Underperform | Target: Rs 3,000
Macquarie expects Avenue Supermarts' growth to disappoint in the near term.
The brokerage sees downside risk to consensus growth estimates due to rising competitive pressures from quick commerce players.
As the impact of quick commerce starts reflecting in the base, growth challenges for DMart could intensify.
JM Financial Services | Rating: Hold | Target: Rs 3,880
JM Financial projects a 40-basis-point contraction in Ebitda margins despite stable gross margins, citing elevated employee and other operating expenses amid heightened competitive activity.
Sales per square feet are expected to rise 2% annually, reflecting a gradual recovery in store productivity.
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