DMart stock rises: Shares of Avenue Supermarts (DMart) jumped as much as 4.29 per cent to hit an intraday high of Rs 5,166.10 per share on Monday, on the back of strong june quarter results (Q1FY25).
However, the stock was off highs and was trading merely 0.59 per cent higher at Rs 4,982.55 per share, at 9:57 AM. In comparison, BSE Sensex was trading 0.15 per cent higher at 80,643.32 levels.
DMart’s profit rose 17.5 per cent on a year-on-year (Y-o-Y) basis to Rs 773.7 crore in the June quarter of FY25 (Q1FY25), helped by improvement in sales from general merchandise and apparels. The company had posted a net profit of Rs 658.7 crore in the same quarter a year ago (Q1FY24).
The supermarket chain operator’s revenue from operations soared nearly 19 per cent Y-o-Y to Rs 14,069.1 crore in Q1FY25, as against Rs 11,865.4 crore in the corresponding quarter last fiscal (Q1FY24).
The total expenses in the June quarter rose 18.6 per cent to Rs 13,056.61 crore. Meanwhile, the total income jumped 18.5 per cent Y-o-Y to Rs 14,110.74 crore.
“Our revenue for Q1 FY 2025 grew by 18.4 per cent. Contribution from general merchandise and apparel continued to improve during the quarter and this is reflected in the gross margin uptick (Q1 FY 2025 vs Q1 FY 2024). We opened 6 new stores during the quarter. Our total stores stand at 371 as on June 30, 2024,” said Neville Noronha, CEO & managing director of Avenue Supermarts Limited.
Noronha further highlighted that operating costs have gone up due to continuing effort on improving service levels and building capability for the future.
What do analysts say?
DMart’s first quarter results for 2025 met expectations, indicating stabilisation in operational metrics, analysts at Prabhudas Lilladher said. Sales per store grew by 4.7 per cent year-over-year (YoY), while sales per square foot increased by 4.4 per cent YoY, despite the opening of larger stores. The cost of retail rose marginally by 45 basis points YoY, driven by increased operating expenses aimed at enhancing service and sales capabilities for future growth.
However, this led to a slight miss of 17 basis points in Ebitda margin compared to analyst estimates.
During the quarter, DMart expanded its footprint by adding 6 new stores, each larger by 50 per cent Y-o-Y and 20 per cent quarter-over-quarter (QoQ).
Looking ahead to the fiscal year 2025, analysts noted, DMart plans to open approximately 45 new stores, continuing its focus on Tier-2 and Tier-3 cities, potentially accelerating store openings further.
Analysts also highlighted that DMart’s long-term growth prospects remain strong, with potential to operate over 1,500 stores in the duopoly market. However, they cautioned about the slower expansion pace of DMart Ready compared to quick commerce players, which could pose challenges in the long term.
Prabhudas Lilladher, in their assessment, assigned a target price of Rs 5,104 based on discounted cash flow (DCF) analysis. They noted that a re-rating of the stock appears unlikely given the current high valuations of 81x FY26 and 76.7x June26 earnings per share (EPS). Consequently, they revised their recommendation from Buy to Accumulate.
Avenue Supermarts Limited operates the DMart chain of supermarkets, which offer a wide array of home and personal products. Each DMart store stocks a comprehensive range of items including groceries, toiletries, beauty products, clothing, kitchenware, bedding, home appliances, and more.
Product categories span bed and bath essentials, dairy and frozen foods, fresh produce, crockery, toys, children’s apparel, women’s and men’s clothing, home and personal care items, daily necessities, and DMart’s own private label brands.
Promoted by Radhakishan Damani and his family, DMart has established a robust presence across 196 locations in Maharashtra, Gujarat, Daman, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana, Chhattisgarh, the National Capital Region (NCR), Tamil Nadu, Punjab, and Rajasthan. Major cities hosting multiple DMart outlets include Mumbai, Ahmedabad, Vadodara, Bengaluru, Hyderabad, Pune, and Surat.
The market capitalisation of DMart is Rs 3,21,833.05 crore, according to Bombay Stock Exchange (BSE).
First Published: Jul 15 2024 | 10:12 AM IST
