Avenue Supermarts, which runs the D’Mart chain of stores, reported a 5.8% year-on-year growth in consolidated net profit on Saturday at Rs 660 crore for the September quarter (Q2) of FY25. The number missed street estimates, which had forecast bottomline at Rs 790 crore.
Revenue increased by 14.4% year-on-year for the three months ended September, reaching Rs 14,445 crore. Analysts had projected revenue of Rs 14,415 crore for the period. Same-store sales growth (SSG) for Q2 came in at 5.5%, which is lower than the 8.6% SSG reported last year and 9.1% SSG reported in the June quarter.
Operating income, or earnings before interest, taxes, depreciation and amortisation (Ebitda), rose 8.8% year-on-year to Rs 1,094 crore. The Ebitda margin contracted to 7.6% from 8% reported in the same period last year. Analyst estimates for Ebitda and Ebitda margin tracked by Bloomberg were Rs 1,166 crore and 8.3%, respectively.
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Ahead of the earnings, DMart had disclosed a standalone revenue of Rs 14,050.32 crore for Q2, a year-on-year growth of 14.15%. It added six new stores during the quarter, bringing the total to 377. Standalone net profit rose 8% year-on-year to Rs 710 crore during the quarter.
Analysts from brokerages including names such as Morgan Stanley, Bernstein, Goldman Sachs, JPMorgan and Macquarie have cited increased competition from quick commerce players like Blinkit and Swiggy Instamart as a key reason for Avenue Supermarts’ slower SSG in Q2.
Additionally, fewer store additions and weak growth projections point to a more challenging operating environment in the future, the brokerages said. This comes as quick commerce slowly begins to go beyond metros into smaller towns and cities as business booms and their network of dark stores expands, said experts.
“Overall H1 FY2025 like-for-like revenue growth was 7.4% for 2 years and older stores. The Q2 FY 2025 like-for-like revenue growth for the same cohort of stores was at 5.5%,” Neville Noronha, CEO and managing director, Avenue Supermarts, said.
“We clearly see impact of online grocery formats including DMart Ready in large metro DMart stores which operate at a very high turnover per square feet of revenue. DMart Ready business grew by 21.8% in H1 FY2025,” he added.
Fourteen out of the 27 analysts tracking Avenue Supermarts have a ‘buy’ rating on the stock, five recommend a ‘hold’ and eight suggest a ‘sell’, according to Bloomberg data. The average of 12-month analyst price targets imply a potential upside of 9.5%.
From: financialexpress
Financial News
