DMart Shares Tumble 6% As Q1 Business Update Misses Expectations

Mumbai, July3: Shares of Avenue Supermarts Ltd., the operator of the DMart retail chain, fell as much as 4.8% on Friday after the company’s June-quarter business update failed to impress investors, prompting several brokerages to reiterate their cautious stance despite double-digit revenue growth.
 

The selloff came after the retailer reported standalone revenue of ₹18,343.5 crore for the quarter ended June 30, up 15.1% year-on-year, but below Street expectations. As of writing the stock was down 4.8% at Rs 3,985. 

Revenue growth disappoints Street 

While DMart continued to post healthy sales growth, analysts said the numbers fell short of expectations, particularly given the inflation-led boost to grocery prices and the company’s aggressive store expansion over the past few quarters. 

During the April-June quarter, Avenue Supermarts added three new stores, taking its total store count to 503. However, brokerages noted that the pace of expansion slowed considerably compared with recent quarters, raising concerns about future growth momentum.  

Stock has fallen over 7% over a week and over 4% over a month. Source: NSE 

The retailer’s business update offered only revenue and store count details, with profitability and margin figures set to be announced alongside its quarterly earnings later.

Analysts said the June-quarter revenue growth moderated despite higher food inflation and strong store additions toward the end of the March quarter. 

They also highlighted that store additions during the quarter were slower than in recent years, indicating a moderation in expansion. 

Analysts also cited expensive valuations and intensifying competition from quick-commerce platforms. They said margins would be a key monitorable when the company reports detailed quarterly results. 

Focus shifts to earnings 

The muted business update comes as investors closely track the retail sector’s ability to maintain growth amid rising competition from quick-commerce players and evolving consumer shopping habits. 

DMart board is scheduled to approve its detailed June-quarter earnings on July 11, which when released will let investors scrutinise margin trends, same-store sales growth and management commentary on demand. The company’s board will also consider a proposal on the same date to raise funds through the issuance of debt securities on a private placement basis.  

Analysts believe premium valuations leave little room for disappointment. With revenue growth slowing and store expansion moderating, investors are likely to seek stronger evidence that the retailer can sustain its growth trajectory in an increasingly competitive retail landscape.
 

Source

•  https://www.nseindia.com/get-quote/equity/DMART/Avenue-Supermarts-Limited