DMart Q2 Results: Net Profit Up 5.8%, Misses Estimates

Avenue Supermart Ltd. reported a 5.8% year-on-year increase in net profit for the second quarter of this financial year, totaling Rs 659.44 crore, up from Rs 623.35 crore in the same quarter last year. However, this figure fell short of analyst expectations, which were set at Rs 812 crore.

Operating income, measured as earnings before interest, taxes, depreciation, and amortization (EBITDA), rose by 8.8% year-on-year to Rs 1,093.77 crore. Nonetheless, the EBITDA margin decreased to 7.6% from 8% in the prior year, while analysts had projected EBITDA of Rs 1,210 crore and a margin of 8.30%.

Leading up to the earnings report, several brokerages, including Morgan Stanley, Bernstein, Goldman Sachs, JPMorgan, and Macquarie, noted heightened competition from quick commerce players like Blinkit as a significant factor affecting Avenue Supermart’s growth.

The company also faces challenges from slower store openings and more conservative growth forecasts. For the first half of FY2025, like-for-like revenue growth for stores two years and older was 7.4%, with Q2 growth at 5.5%. CEO Neville Noronha highlighted the impact of online grocery formats, particularly noting that the DMart Ready business grew by 21.8% in H1 FY2025.

Following the earnings announcement, the company’s shares closed 0.76% lower at Rs 4,572.70, compared to a 0.14% decline in the NSE Nifty 50 index. Year-to-date, the stock has risen 18.38% and 12% over the past year.

According to Bloomberg data, 14 out of 27 analysts covering Avenue Supermarts recommend a ‘buy’ rating, five suggest a ‘hold,’ and eight advise a ‘sell.’ The average 12-month price target from analysts indicates a potential upside of 9.5%.

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