Shares of Avenue Supermarts, which operates the retail chain DMart, tumbled 2.25% during Monday’s trading session on January 05, hitting a 10-month low of ₹3,635 apiece, as the sell-off deepened following the release of the company’s Q3 business update.
In its filing to the exchanges on Friday, the company reported a standalone revenue from operations of ₹17,612.62 crore for the December quarter (Q3FY26), reflecting a 13.15% increase from ₹15,565.23 crore in the same quarter of the previous fiscal year.
The top-line figure came lower compared with the 16% and 15% YoY growth recorded in the first two quarters of FY26, while also falling short of analysts’ estimates of 17%. JM Financial and Motilal Oswal had estimated revenue growth of 17%, as per the latest reports shared by the brokerages.
During the quarter, Radhakishan Damani-owned DMart added 10 new stores, taking its total store count to 442 (including one store at Sanpada, Navi Mumbai, Maharashtra, which is currently closed to customers due to reconstruction), according to the regulatory filing.
The company’s store additions fell short of estimates, compared with JM Financial’s projection of 20 stores in Q3.
JM Financial estimates showed that sales per sq. ft. remained flat YoY at ₹9.73k/sq. ft., which is 3% lower than Q3FY20 levels of ₹10k/sq. ft. Its analysis indicated a same-store sales growth (SSSG) of 4%.
Brokerages flag slowing growth, margin pressure
DMart’s gross margin had stabilised in 2QFY26. However, given a weak revenue print and an increase in discounting by quick commerce companies, Motilal Oswal expects margin pressures to continue over the medium term.
While discounting intensity is likely to remain elevated, acceleration in store additions remains the key growth driver for DMart. The brokerage projects 60 net store additions in FY26, up from 50 in FY25.
JM Financial also expects a flat gross margin but estimates a 40-basis point YoY dip to 7.5% in Q3FY26, largely due to negative operating leverage. Overall, it expects EBITDA to grow 8% YoY to ₹13.3 billion.
According to the brokerage’s calculations, EBITDA per sq. ft. is expected to be ₹734, down 5% YoY due to flat sales per sq. ft. and an estimated 14% and 4% increase in staff and other expenses per sq. ft., respectively.
“We expect PAT to grow 3% YoY to ₹8.1 billion, lower than EBITDA growth largely on account of higher depreciation expenses and lower other income,” said JM Financial.
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