Avenue Supermarts (DMart) shares fell more than 4% on Monday following the release of Q1 FY27 results, as investors focused on the company's slower growth in mature stores despite strong overall financial performance. The stock traded at ₹3,988.20 on the NSE at 12.10 pm after hitting an intraday low of ₹3,908, compared with the previous close of ₹4,081.10. The market reaction reflects concerns about flat growth in older metro stores and the impact of quick commerce competition on traditional retail formats. According to The Hindu BusinessLine, the mixed results have tempered what would otherwise have been an upbeat quarterly performance, with the stock movement highlighting investor focus on operational challenges rather than financial metrics.
Avenue Supermarts (DMart) announced their financial results for the first quarter of FY27 on Saturday, July 11. The company reported a standalone net profit of ₹935.77 crore for the quarter ended June 30, showing a 12.78% rise from ₹829.7 crore reported in the same quarter last year. According to Business Standard, revenue from operations increased 15.13% to ₹18,343.49 crore compared with ₹15,932.1 crore in the year-ago period. The company's revenue from operations increased 15.1% year-on-year to ₹18,343.5 crore, with sequential growth of 6% from ₹17,204.5 crore in Q4 FY26. On a consolidated basis, net profit increased 11.33% to ₹860.61 crore, while revenue from operations increased 14.88% to ₹18,794.53 crore compared with ₹15,932 crore in the year-ago period. EBITDA (earnings before interest, taxes, depreciation, and amortisation) was ₹1,499 crore, with EBITDA margin improving marginally to 8.0% from 7.9%, while basic earnings per share rose to ₹14.35 from ₹12.75.
For sequential comparison, the net profit for Q4 was ₹656.6 crore, which was less than the ₹680 crore expectation from the CNBC-TV18 poll. However, the company's EBITDA (earnings before interest, taxes, depreciation, and amortisation) was ₹1,210.5 crore, somewhat higher than the poll forecast of ₹1,200 crore. On a year-on-year basis, profit rose 19.2% from ₹550.9 crore, while revenue increased 18.9% to ₹17,683.9 crore from ₹14,871.9 crore. EBITDA grew 26.7% to ₹1,210.5 crore from ₹955.1 crore in the year-ago period, with operating margins expanding to 6.85% from 6.42% a year earlier. The company's June-quarter earnings before interest and taxes (EBIT) grew 16.3% to ₹1,527 crore, with margin expanding by 10 basis points to 8.3%, in line with analyst estimates. However, higher employee costs, finance expenses and other operating costs continued to weigh on profitability during the quarter, as reported by Mint.
Brokerages remain divided on growth outlook following the Q1 results, with mixed recommendations across major financial institutions. Motilal Oswal and Axis Securities retained Buy ratings, arguing that DMart's value-focused model, superior store economics and expansion strategy remain intact. Motilal Oswal continues to expect revenue, EBITDA and profit to grow at a CAGR of 18 percent, 19 percent and 16 percent, respectively, over FY26-FY29, with retained Buy rating and target price of ₹4,800. Axis Securities has also retained its Buy rating, saying improving demand and continued expansion should support medium-term growth. JPMorgan cut its target price to ₹4,250 after weaker-than-expected same-store sales, describing the slowdown as the quarter's biggest disappointment. Goldman Sachs retained its Sell rating with target price of ₹4,000, arguing that slowing revenue growth, flat metro demand and higher operating costs continue to outweigh benefits. Citi lowered its FY27-FY29 revenue estimates by 4-6 percent and earnings forecasts by 5-7 percent, maintaining its sell rating with target price of ₹3,400. Jefferies identified quick commerce as the biggest structural overhang and maintained Hold rating with target price of ₹4,500, despite acknowledging that underlying demand was better than headline numbers suggested.
DMart opened 3 new stores during the quarter, taking its total store count to 503 as of June 30, compared to 424 stores a year ago, according to The Economic Times. The company indicated 15.1% growth in quarterly revenue to ₹18,343.5 crore in its recent business update, with same-store sales growth (SSSG) at modest mid-single-digit levels. However, revenue from sales per sq.ft. was down 2.37% year-on-year at ₹8,571 crore in Q1FY27, indicating some pressure on store productivity. The company is focusing on cluster-based expansion strategies and discontinued operations in seven cities during the quarter, bringing the total metro presence to 11 cities as of June 30, 2026. As per Mint, two years and older DMart stores grew by 5.5% during Q1 FY27 as compared to 7.1% in Q1 FY26, with growth in large metros remaining flat while non-metro stores continue to perform well. CEO Anshu Asawa noted that growth in older stores across large metropolitan markets, which generate significantly higher revenue per square foot, remained flat during the quarter. The store footprint was 19% higher year-on-year and drove growth even as like-for-like growth in mature stores slowed down to 5.5% in Q1 from 10.8% in Q4.
DMart's core Foods category revenue share dipped to 54.93% this quarter, compared to 55.60% in Q1FY26, according to the company's investor presentation. The category, which includes staples, groceries, dairy, processed foods, and fruits & vegetables, remains DMart's largest revenue contributor but has come under pressure due to intense competition from e-commerce and quick commerce players. Revenue share from non-food consumer good items like personal care, toiletries, home care remained stable at 19.60%, while general merchandise and apparel sales rose to 25.47% up from 24.73% reported last year. The company's e-commerce arm Avenue E-Commerce Ltd (AEL) reported comprehensive loss of ₹91.39 crore for the quarter, as reported by Moneycontrol, with CEO Vikram Dasu noting the discontinuation of operations in seven marginal contributor cities. Sales continued to be dominated by food and grocery products, which contributed 54.9% of total revenue in the June quarter, down from 55.6% a year earlier, according to Mint. The relatively stable product mix suggests the company did not see any meaningful shift towards higher-margin categories despite a slight uptick in discretionary sales. However, the revenue mix also saw a slight shift towards higher-margin categories, with General Merchandise & Apparel (GM&A) contribution increasing to 25.5% from 24.7% a year earlier, while Foods and FMCG share declined to 74.5% from 75.3%.
