DMart’s ongoing expansion into non-metro towns, which is strategically aimed at avoiding the intense quick commerce competition, is adding to operational costs, thereby impacting margins. Additionally, the company’s efforts to upgrade its e-commerce platform to remain competitive in the digital space require significant investment in technology, logistics, and talent, further weighing on profitability in the short to medium term.
With a market capitalisation of Rs. 2,66,289 Crores. The Stock performance has not been too good in recent times, with the 1-year return standing at -13 percent and the past 5-year return standing at a modest 70 percent. For the past 4 years, the stock has been trading in a range of around 2,100 points from Rs. 3,300 on the downside to an upside of Rs. 5,400
Founded by Radhakishan Damani in 2002, and is headquartered in Mumbai, Maharashtra. Avenue Supermarts Limited, popularly known as DMart, is an Indian retail company that operates a chain of hypermarkets and supermarkets.
DMart offers a wide range of products, including food, groceries, apparel, kitchenware, toiletries, and home essentials, all at competitive prices. Known for its cost-efficient model and focus on value retailing.
Financial & Business Highlights
The company reported a 16.85 percent YoY increase in revenue from Rs. 12,726.55 Crore in Q4FY24 to Rs. 14,871.86 Crore in Q4FY25. On a QoQ basis, the company reported a decrease of 6.89 percent in revenue from Rs. 15,972.55 Crore in the previous quarter.
Their Net profit saw a decrease of 2.19 percent YoY from Rs. 563.14 Crore to Rs. 550.79 Crore for the same period. On a QoQ basis, the company reported a decrease of 23.87 percent in Net profit from Rs. 723.54 Crore in the previous quarter.
For the share of Revenue, Food Accounts account for 57.73 percent out of the total Revenue, Non-foods (FMCG) accounts for 20.01 percent, and General Merchandise & Apparel accounts for the rest 22.26 percent.
From FY24 to FY25 store count has increased from 365 Stores to 415 Stores, with the majority of stores situated in West, South, and Central India, which fits the Dmart’s cluster-based expansion strategy. However, the DMart Ready (online grocery and essentials delivery service offered by DMart) warehouses only increased by 2 from 23 cities to 25 Cities
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Margin Concerns
The EBITDA Margin stood at 6.40 percent for the Q4FY25 quarter compared to 7.40 percent for Q4FY24, and the PAT Margin stood at 3.70 percent as compared to 4.40 percent for the same period.
The company commented about 3 things that happened during Q4FY25: Competition intensity increased in the FMCG space, which impacted their gross margins, there was a surge in wages of entry-level positions, and the company made continued investments in improving their service levels.
The fall in Margins can be attributed to increasing new store openings, scaling their online business, and further, the margin pressure could sustain as even the management is stating increased competitive pressure on the business, and other macroeconomic factors may affect the business.
Written By Abhishek Das
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