DMart Q3 Review - Lower Margin, Higher CoR Result In Earnings Miss; Motilal Oswal Retains 'Buy' On The Stock

While we believe DMart’s value-focused model would co-exist with QC’s convenience model over the longer term, rising competition on pricing could weigh on DMart’s growth and margins in the near term..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Avenue Supermarts Ltd. posted weak results in Q3 FY25 as standalone Ebitda grew 10% YoY (4% miss) due to weaker gross margin and higher cost of retailing.Management indicated that increased intensity in discounting in the FMCG category continued to impact the high turnover per sqft stores in metros. However, the impact was relatively lower versus Q2 FY25. DMart’s like-for-like growth for over two-year-old stores rose to 8.3% in Q3 (versus ~5.5% in Q2), albeit below the ~10% LFL growth rate in FY24. The company’s growth moderated in the non-food FMCG (~13% YoY) and general merchandise and apparel (~16% YoY) segments, with GM&A’s contribution declining ~30 bp YoY. We believe higher competitive intensity in FMCG and lower GM&A contribution could have led to moderation in gross margin (down ~20bp YoY). DMart added 10 stores in Q3 FY25 (22 in nine months). Acceleration in store additions remains the biggest growth driver for DMart, and we expect the pace of store additions to pick up in Q4 (build in 40 store additions in FY25)..Click on the attachment to read the full report:.DMart Q3 Review: Analysts Cut Target Amid Margin Pressure As Market Share Pursuit Intensifies.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit. .Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

DMart Q3 Review - Lower Margin, Higher CoR Result In Earnings Miss; Motilal Oswal Retains 'Buy' On The Stock

Motilal Oswal models a 15-17% CAGR in DMart’s consolidated revenue/Ebitda/PAT over FY24-27E.

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