DMart, India’s beloved budget retail chain, is having a reality check moment. Its parent company, Avenue Supermarts, saw its stock crash nearly 4% on Thursday after its Q1 revenue growth came in below expectations.
The numbers were still in the green — revenue grew 16.2% year-on-year to ₹15,932 crore. But for the stock market, growth that isn’t fast enough feels like a red flag. The stock dropped to ₹2,417.9 per share in early trade — its sharpest fall since June 10. By mid-morning, it was still down 3.3%, even as the Nifty 50 was inching higher.
So what went wrong?
The Growth is There — But Not Enough
While DMart has posted consistent revenue growth — ₹9,806 crore in Q1 2022, ₹11,584 crore in Q1 2023, and now ₹15,932 crore — investors were expecting more.
Brokerage JM Financial said the revenue was 1% lower than their estimates and 2% below market consensus. It’s a small miss, but in stock market terms, small misses can shake big faith.
And while DMart’s store count rose to 424 (including one temporarily shut for renovation), it’s not just about opening stores anymore. It’s about making each one work harder.
Margins Under Pressure
According to analysts, even though gross margins were expected to stay flat, operating costs are eating into profits. JM Financial expects EBITDA margins to dip 40 basis points to 8.5% in Q1.
Add rising depreciation costs and less other income, and net profit growth is expected to slow to just 7% year-on-year.
That’s not terrible — but for a company that’s been a market darling, it feels like the sparkle is fading just a bit.
A Bigger Picture: Mission vs. Money
DMart has always stood out for sticking to its mission — low prices, no frills, high volume. It didn’t chase glamour. It chased groceries. And it worked.
But now, as competition from Reliance, Tata, and online giants like Amazon heats up, the question is: Can DMart keep its mission alive without sacrificing margins? Or will pressure from the market force it to play by new rules?
Speed is easy. Endurance is rare. DMart has proven it can grow. Now it must prove it can do it smartly — under pressure, with rising costs, and against faster rivals.
Disclaimer:
This article is for informational purposes only and is not financial advice. Please consult a certified advisor before making investment decisions.
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