DMart Q2 Results: Avenue Supermarts Posts 4% Profit Growth, Revenue Surges 15%
Avenue Supermarts, which operates the popular DMart retail chain, announced its second quarter results for fiscal year 2026 on Saturday, showing steady profit growth and robust revenue expansion. The company reported net profit of ₹684.8 crore, representing a 3.9% year-on-year increase from ₹659.4 crore in the corresponding quarter of the previous year.
Strong Revenue Growth Continues
The company's operational revenue demonstrated impressive momentum, rising 15.4% to reach ₹16,676.3 crore for the quarter ended September 30, 2025, compared to ₹14,444.5 crore in the same period last year. This double-digit revenue growth reflects strong consumer demand and successful store expansion strategies.
The substantial revenue increase indicates that DMart continues to attract customers with its value-focused retail model, even as competition intensifies in India's organized retail sector.
Expense Growth and Margin Dynamics
Total expenses for Avenue Supermarts during Q2 FY26 increased 16% to ₹15,751.08 crore, compared to ₹13,574.83 crore in the same quarter last year. The expense growth slightly outpaced revenue expansion, reflecting investments in store expansion, infrastructure development, and operational scaling.
The higher expense growth relative to revenue indicates the company is prioritizing expansion and market presence, accepting some near-term margin pressure to capture long-term growth opportunities.
Earnings Per Share Improvement
Shareholders saw improved returns with earnings per share (EPS) for Q2 FY26 standing at ₹10.53, up from ₹10.14 in Q2 FY25. This improvement reflects the company's ability to generate incrementally better per-share profitability despite ongoing expansion investments.
Store Network Expansion
DMart opened 8 new stores during the quarter, bringing the total store count to 432 stores as of September 30, 2025. This steady expansion demonstrates the company's commitment to strengthening its physical retail footprint across India.
The new store additions are strategically important as they provide:
- Enhanced market penetration in existing regions
- Entry into new geographic markets
- Increased convenience for customers
- Economies of scale in operations and procurement
Management Commentary on Performance
Anshul Asawa, CEO-Designate of Avenue Supermarts, provided insights into the quarterly performance, highlighting that profit after tax (PAT) grew 5.1% over the previous year. He emphasized that stores which have been operational for two years or longer demonstrated 6.8% growth during Q2 FY26 compared to Q2 FY25.
This mature store performance is particularly significant as it indicates that DMart's business model continues delivering growth even from established locations, suggesting sustainable customer loyalty and effective merchandising strategies.
GST Reform Benefits Passed to Customers
Following the government's recent GST reform announcement, Avenue Supermarts confirmed that it passed on the benefits of reduced GST rates to customers wherever applicable. This customer-centric approach demonstrates the company's commitment to its value retail positioning.
By immediately transferring GST savings to consumers, DMart reinforces its brand promise of offering lowest prices, potentially strengthening customer loyalty and competitive positioning against rivals who might delay such price adjustments.
E-Commerce Operations Update
Vikram Dasu, Whole Time Director and CEO of Avenue E-Commerce, provided updates on the digital retail operations. The company added 10 new fulfillment centers in existing markets, continuing investments to deepen presence in large metropolitan cities.
Strategic E-Commerce Rationalization
In a significant strategic move, DMart ceased e-commerce operations in 5 cities during the quarter:
- Amritsar
- Belgavi
- Bhilai
- Chandigarh
- Ghaziabad
Following these exits, DMart's e-commerce platform now operates across 19 cities in India. This rationalization suggests the company is focusing resources on markets where online grocery delivery demonstrates stronger economics and customer adoption.
The decision to exit certain cities likely reflects a disciplined approach to e-commerce profitability, concentrating investments in metro markets where online grocery shopping has achieved critical mass.
Stock Market Performance
Avenue Supermarts shares closed 0.30% higher at ₹4,319.7 after the Friday trading session. The company announced results after market closing hours on Saturday. On Friday, shares opened at ₹4,300.35 per share on the BSE.
The modest price movement suggests investors had largely anticipated results in line with the announced figures, though the stock's premium valuation indicates continued confidence in the company's long-term prospects.
Competitive Positioning
DMart's Q2 results demonstrate the company's ability to maintain growth momentum in India's competitive organized retail landscape. Key competitive advantages include:
- Value Positioning: Consistent focus on offering lowest prices
- Efficient Operations: Lean cost structure supporting price competitiveness
- Strategic Locations: Stores positioned for maximum customer convenience
- Category Mix: Focus on daily needs and staple products
- Private Labels: Growing contribution from higher-margin proprietary brands
Growth Drivers and Opportunities
Several factors support DMart's continued growth trajectory:
- Retail Organized Shift: Ongoing migration from unorganized to organized retail
- Store Expansion: Significant whitespace remains across Indian cities
- Same-Store Sales: Mature stores continue delivering positive growth
- E-Commerce Potential: Online grocery market expansion opportunities
- Consumer Trends: Rising middle class with growing purchasing power
Challenges and Considerations
Despite strong performance, Avenue Supermarts faces several ongoing challenges:
- Competition: Intensifying rivalry from traditional retailers and e-commerce platforms
- Margin Pressure: Expense growth outpacing revenue expansion
- E-Commerce Losses: Online operations likely not yet profitable
- Real Estate Costs: Premium locations driving up store establishment costs
- Economic Sensitivity: Consumer spending vulnerable to economic cycles
Financial Health Indicators
The quarterly results reveal several positive indicators about the company's financial health:
- Consistent profitability despite aggressive expansion
- Strong revenue growth indicating market share gains
- Improving EPS demonstrating shareholder value creation
- Disciplined e-commerce strategy focusing on viable markets
- Ability to pass GST benefits immediately suggests strong supplier relationships
Outlook and Future Prospects
Avenue Supermarts' Q2 performance positions the company well for continued growth. The combination of steady store expansion, positive same-store sales growth, and strategic e-commerce investments creates multiple growth levers.
The focus on metro cities for e-commerce expansion and rationalization of less viable markets demonstrates management's commitment to profitable growth rather than just topline expansion. This disciplined approach should support margin improvement as operations mature.
Investment Perspective
For investors, the results present a mixed picture. Strong revenue growth and store expansion are positive, but modest profit growth and expense pressures warrant attention. The company's premium valuation implies high expectations for future performance.
Key considerations for investors include:
- Track record of execution and store expansion
- Dominant position in value retail segment
- Long runway for growth in underpenetrated markets
- Valuation already reflecting optimistic growth expectations
- Need for margin improvement as operations scale
The quarterly results reinforce DMart's position as a leading organized retailer in India, though investors should monitor margin trends and e-commerce profitability trajectory in coming quarters.
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