DMart Q4 Preview: Store Additions To Aid Revenue, Margins Likely To Contract

Avenue Supermarts Ltd., the operator of DMart retail chain, is expected to report mid-teen revenue growth year-on-year for the fourth quarter on the back of store additions. However, cost pressures may weigh on margins.

The standalone revenue for the three months ended March is seen rising 17% to Rs 14,464 crore, according to Bloomberg consensus estimates. Profit may rise 9%, with margins seen contracting to 7.3% versus 7.6%.

Between January and March, the Radhakishan Damani-founded company opened 28 new stores — the highest quarterly additions since it started reporting business updates more than four years ago. It opened 17 stores across Punjab, Maharashtra, Karnataka, Telangana, Madhya Pradesh, Tamil Nadu, Gujarat, Andhra Pradesh and Rajasthan in last ten days of March. As of March 31, the total DMart store count across the country stood at 415.

The company is also likely to benefit from mid-to-high single-digit same-store sales growth, though a meaningful recovery in discretionary demand is yet to materialise. Even as near-term margins remain under pressure due to higher retail costs, brokerages maintain that DMart's balance sheet strength and low leverage continue to position it well for long-term growth.

Key things to watch out for will be:

• Commentary on competition from quick commerce players.

• Discounts being offered to gain market share, offset competition.

• Contribution of new stores to revenue growth.

• DMart Ready's online traction and store expansion outlook for FY26.

Avenue Supermarts Q4 Preview (Standalone, YoY)

• Revenue seen 17% higher at Rs 14,464 crore versus Rs 12,393 crore.

• ⁠Ebitda seen 12% higher at Rs 1,052 crore versus Rs 940 crore.

• Margin seen at 7.27% versus 7.58%.

• ⁠Profit seen 9% higher at Rs 658 crore versus Rs 604 crore.

Brokerage Views

Nuvama Institutional Equities

• The 3% YoY growth in per store revenue is similar to previous quarters.

• Expect like-for-like of 7.5% in Q4.

• DMart may report a gross margin of 13.5% with a negative bias (Q4FY24: 13.7%) assuming a stable general merchandise and apparel mix. Increasing competition to have negative impact.

BofA

• Key downside: More competitive intensity from other grocery players could materially hurt DMart's growth and stock valuations.

• However, faster than expected store rollout could boost growth rates.

• A positive surprise from DMart Ready or upsides due to the recent business investments could be beneficial.

Systematix Institutional Equities

• Most of the new store openings for DMart occurred late in the quarter, with the full benefits expected to emerge from June 2025 quarter onwards.

• Expect revenue growth of 16.7%.

• Sees Ebitda margin contraction of 54 basis points on year-on-year basis.

Axis Capital

• Revenue to grow largely led by store expansion and 3% year-on-year growth in sales per square feet.

• Ebitda margin to contract 40 bps on the back of higher operational expenses and staff costs.

• Gross margin to remain flattish YoY.

Motilal Oswal

• Consolidated revenue to grow 17% YoY, led by store additions (+14%) and mid-to-high single-digit same store sales growth.

• Expect Ebitda margin to contract 20 bps YoY to 7.2% due to the continued higher cost of retailing.

• Expect PAT to grow 8% YoY.

Shares of Avenue Supermarts Ltd. fell 3.04% to Rs 4,060.5 apiece on the BSE ahead of results compared with benchmark Sensex's 0.32% gain on Friday. The company is set to announce its results on Saturday, May 3, which is a market holiday.