Avenue Supermarts, the parent company behind the popular DMart retail chain, experienced a notable decline in stock value, dropping 5% on Friday, April 4, 2024. This dip saw shares sliding below the ₹4,000 threshold, closing at ₹3,946. The downturn followed the company’s latest business update, which revealed disappointing results for the March 2025 quarter, falling short of what analysts had anticipated.

Revenue Performance

In its recent exchange filing, Avenue Supermarts disclosed a standalone revenue from operations of ₹14,462 crore for the March quarter. This figure represents a commendable increase of over 16.67% compared to ₹12,393 crore in the same quarter of the previous fiscal year (Q4FY24).

• Store Openings: The company marked a significant milestone by opening 28 new stores during this quarter, making it the highest quarterly addition in four years. This brings the total count to 415 stores.
• Annual Growth: In total, 50 stores were added in FY25, surpassing the 41 stores added in FY24 and 40 in FY23. This exceeded analysts’ forecasts of 40 new stores for the year.

Challenges Ahead

Despite these positive developments, Avenue Supermarts faced challenges, particularly in the context of rising quick commerce activity that impacted store performance in metropolitan areas. The company’s December quarter results indicated weaker-than-expected performance, although the adverse effects were less pronounced than during Q2FY25.

Analysts at Axis Securities previously highlighted that the retail giant is likely to encounter ongoing difficulties in optimizing its store metrics due to intensified competition. Key points include:

• Increased Competition: The retail landscape is becoming more competitive with the emergence of both organized players like Reliance and Star Bazaar, as well as online services such as Zepto and Blinkit.
• Market Share Erosion: This competition is eroding DMart’s market share in urban areas and smaller towns.
• Profitability Concerns: The need for higher discounts to stay competitive may adversely affect overall profitability.

Stock Price Trends

Following a turbulent five-month period that saw a 33% drop, Avenue Supermarts’ stock rebounded by 20% in March. However, the shares remain 32% lower than their peak of ₹5,900, which was reached in October 2021.

While analysts believe that DMart’s value-centric approach can coexist with the convenience-focused models of quick commerce in the long run, they caution that the current pricing pressures may pose challenges to growth and profit margins in the near future.

In summary, while Avenue Supermarts continues to expand its footprint with new store openings, it must navigate a complex landscape marked by fierce competition and changing consumer preferences. The upcoming fiscal year will be crucial for the company as it adapts to these challenges while maintaining its growth trajectory.