Avenue Supermarts, famously known as DMart and owned by Radhakishan Damani, is gearing up to disclose its financial performance for the March quarter (Q4FY25) on May 3. Analysts predict a solid year-on-year (YoY) growth in both sales and profits, although pressures on profit margins could persist, influenced by a consistent mix of general merchandise and apparel.
Impressive Growth Amid Margin Pressures
As one of India’s leading food and grocery retailers, DMart reported a modest 4.9% YoY rise in its consolidated net profit for Q3FY25. However, the company experienced a dip in its net profit margin, dropping from 5.1% to 4.5% YoY. The EBITDA margin also saw a decline, falling from 8.3% to 7.6% YoY.
In early April, DMart shared encouraging updates about its business performance, revealing a standalone revenue from operations of ₹14,462 crore for the March quarter. This figure marks a 16.67% increase from ₹12,393 crore during the same quarter last year (Q4FY24). Notably, the company expanded its footprint by launching 28 new stores, marking the highest quarterly growth in four years. DMart now operates a total of 415 stores, having added 50 stores in FY25, surpassing the 41 and 40 stores added in FY24 and FY23, respectively.
Financial Forecasts from Leading Brokerages
Top financial institutions have provided insights into DMart’s upcoming results. According to Motilal Oswal Financial Services, the adjusted PAT is expected to rise by 7.8%, with revenue projected to increase by 17% YoY. This growth is attributed to store expansions (+14%) and a steady mid-to-high single-digit same-store sales growth (SSSG). Furthermore, EBITDA is anticipated to grow by 13.9% YoY, though the EBITDA margin may see a slight contraction of 20 basis points, dropping to 7.2% from 7.4%.
- Store Count: 28 new stores added in Q4
- Total Stores: 415
- Revenue Growth Forecast: 17% YoY
Nuvama Institutional Equities also expects a 17% YoY increase in revenue and an 8% YoY rise in EBITDA. Their estimates predict a 3% YoY increase in PAT, reaching ₹620 crore. They project a gross margin of 13.5%, down from 13.7% in Q4FY24, leading to an estimated EBITDA margin of 7%.
Similarly, Kotak Institutional Equities forecasts a 16.9% YoY revenue growth for Q4, driven by the addition of new stores and modest SSSG. They anticipate a slight decline in gross margin to 14.4%, alongside an EBITDA margin of 7%, with expectations of further contraction due to seasonal factors.
DMart Stock Performance
As of May 2, DMart shares closed at ₹4,060.50, reflecting a 3.04% decrease, just before the eagerly awaited Q4 results. Over the past year, the stock has seen a downturn of nearly 12%, hitting a 52-week low of ₹3,337.10 on March 3 and reaching a 52-week high of ₹5,484 on September 24 of the previous year. Notably, the stock rebounded by 20% in March, followed by a 3% increase in April.
In summary, while DMart is projected to showcase strong growth figures, the challenges of maintaining profit margins and managing operational costs remain critical as the company navigates its expansion strategy. Keep an eye out for the upcoming financial results, which will shed light on DMart’s performance amid the evolving retail landscape.
