DMart Shares Decline 3% Post Q4 Results; Net Profit Drops Despite Revenue Growth

Market Reaction

DMart shares declined 3% in early trade on Monday following the announcement of Avenue Supermarts' Q4 results for FY25. The fall reflects investor sentiment after the retail giant posted mixed financial performance despite a healthy revenue rise.

Q4 Highlights: Avenue Supermarts Performance

Revenue

• Standalone revenue from operations stood at ₹14,462.39 crore, up 17% from ₹12,393.46 crore in the same quarter last year.

EBITDA

• Standalone EBITDA stood at ₹980 crore, reflecting a modest 4% year-on-year increase.

EBITDA Margins

• EBITDA margins contracted to 6.8%, down 80 basis points (bps) YoY and 115 bps sequentially.
• The margin drop was attributed to:
  • Weak gross margins
  • A 12% YoY increase in per-square-foot operating costs

Net Profit

• Consolidated net profit fell 2% to ₹551 crore, down from ₹563 crore in Q4FY24.
• Standalone net profit, however, rose by 2.6% to ₹619.71 crore, compared to ₹604.20 crore last year.

What Led to the Share Price Dip?

The decline in DMart shares was primarily driven by pressure on profit margins despite revenue growth. Rising operating costs and increased competition in the FMCG sector impacted profitability.

Additionally, the company's ongoing leadership transition and focus on aggressive expansion and e-commerce scale-up have added to investor caution.

Company Overview: Avenue Supermarts

Avenue Supermarts operates DMart, one of India's largest and most successful retail chains. Known for its strong cost-efficiency model and customer-centric approach, DMart has been expanding its footprint aggressively in recent quarters.

Despite short-term pressures, the company continues to focus on:

• Store network expansion
• Enhancing e-commerce operations
• Improving customer experience

Summary

DMart shares fell 3% post-Q4 results as Avenue Supermarts reported declining consolidated net profit and margin compression. Although revenue growth remained strong at 17%, rising operational costs and higher competition in the retail sector took a toll on profitability.

With the company amid a leadership transition and focusing on long-term growth through store additions and digital expansion, the stock may continue to witness short-term volatility.