DMart Shares Tumble Nearly 4% After Q1 Earnings as Brokerages Flag Rising Quick Commerce Threat

Mumbai, July 13: Shares of Avenue Supermarts, the operator of DMart, fell as much as 3.6% on Monday after its June-quarter earnings failed to impress investors, with brokerages warning that intensifying competition from quick commerce players is weighing on growth in key metro markets. While the retailer reported resilient profit growth and a modest improvement in operating margins, slowing same-store sales and mounting pressure from rapid-delivery platforms dampened sentiment.  

The stock declined despite the company posting healthy revenue and earnings growth, suggesting investors had expected a stronger performance from India’s largest listed grocery retailer. Analysts said DMart’s core value retail model remains intact, but the rapid rise of quick commerce platforms such as Blinkit, Zepto and Swiggy Instamart is beginning to alter consumer shopping behaviour, particularly in large urban centres. As of writing the stock was down 2% at Rs 4,000.

Q1 performance remains healthy

Investors punished the stock over slowing sales at mature stores. Source: NSE

For the quarter ended June 30, Avenue Supermarts reported a 12.8% year-on-year increase in standalone net profit to Rs 935.8 crore, while standalone revenue rose 15.1% to Rs 18,343 crore. On a consolidated basis, net profit grew 11.3% to Rs 860.6 crore, with revenue increasing to Rs 18,795 crore. 

The retailer also reported a slight improvement in profitability, with EBITDA margin expanding to 8% from 7.9% a year ago, reflecting continued cost discipline despite a competitive retail environment. During the quarter, the company added three new stores, taking its nationwide network to 503 outlets. 

While the headline numbers remained robust, investors focused on slowing growth at mature stores, which brokerages believe is a more important indicator of underlying demand.

Metro growth loses momentum 

A key concern highlighted by analysts was the slowdown in same-store sales growth. 

Stores that have been operational for more than two years recorded 5.5% growth during the quarter, compared with 7.1% in the corresponding period last year. According to management, mature stores in metro cities witnessed largely flat growth, while non-metro markets continued to deliver healthier demand. 

Brokerages believe this divergence reflects changing consumer preferences in urban India, where quick commerce platforms are increasingly capturing grocery purchases by offering deliveries within minutes. The trend has intensified competition for traditional supermarkets, particularly in categories such as packaged food, beverages and daily essentials.  

Several analysts noted that although DMart continues to benefit from its everyday low-price strategy and loyal customer base, it may face increasing challenges in maintaining growth in densely populated cities where convenience has become a key purchasing factor. 

Brokerages remain cautious 

Following the earnings announcement, several brokerages retained a cautious stance on the stock despite acknowledging the company’s operational resilience. 

Analysts said margin performance remained stable and earnings quality was healthy, but slowing mature-store growth and rising competitive intensity from quick commerce players continue to cloud the near-term outlook. Some brokerages also noted that the stock’s premium valuation leaves limited room for disappointment, making sustained revenue acceleration critical for future upside.  

Brokerages believe investors will closely monitor whether DMart can revive same-store sales growth over the coming quarters while protecting margins against increasing competitive pressure.

DMart recalibrates online strategy 

The earnings come at a time when the retailer is reshaping its digital business. 

DMart recently announced that it had discontinued DMart Ready operations in seven cities, reducing the platform’s presence to 11 cities as it focuses on profitability and stronger execution in larger urban markets. Management said the exited locations were marginal contributors to the overall business.  

Unlike quick commerce rivals, DMart Ready has traditionally relied on scheduled deliveries and pickup centres rather than ultra-fast deliveries. However, the rapid expansion of Blinkit, Zepto and Swiggy Instamart has significantly altered consumer expectations, forcing traditional retailers to reassess their online strategies. 

Industry analysts believe DMart’s decision reflects a more disciplined allocation of capital rather than an aggressive push to match competitors’ rapid expansion. 

What lies ahead?

Despite near-term concerns, analysts remain constructive on DMart’s long-term fundamentals. The company continues to enjoy one of the strongest balance sheets in the retail sector, a highly efficient supply chain and a proven low-cost operating model that has delivered consistent growth over the years. 

Going forward, investors will closely watch the pace of store additions, trends in mature-store sales, margin performance and management’s strategy to address the growing challenge posed by quick commerce. The company’s ability to strike a balance between protecting profitability and adapting to rapidly evolving consumer preferences will likely determine whether the stock can regain momentum after Monday’s sharp decline