DMart Q1 FY26: Profit Flat at ₹773 Cr as Costs Rise Amid Robust Sales
Tough Competition and Higher Expenses Offset Revenue Gains
Financial Highlights
Avenue Supermarts, which operates the DMart chain, reported a nearly flat net profit of ₹773 crore for Q1 FY26, down just 0.1% from ₹774 crore a year earlier.
- Revenue growth: Up 16.3% to ₹16,359.7 crore, from ₹14,069 crore in Q1 FY25.
- Standalone performance: Net profit rose 2.1% to ₹830 crore, on revenues of ₹15,966.3 crore (versus ₹13,763.8 crore).
EBITDA and Margins Under Pressure
Consolidated EBITDA climbed 6.4% to ₹1,299 crore, compared with ₹1,221.2 crore in Q1 FY25.
- EBITDA margin: Slipped to 7.94% from 8.68%, reflecting higher operating costs.
Competitive Intensity Weighs on Margins
“Deflation in staples and non-food categories trimmed revenue impact by 100–150 bps,” said CEO Neville Noronha.
- Gross margins fell due to intense FMCG competition.
- Operating costs rose on service-level enhancements, capacity building, and wage inflation.
Wage Inflation and Industry Trends
Rising staff costs mirror sector-wide pressures:
- Quick commerce wages rose 17% over three years, from ₹25,600 (CY22) to ₹27,726 (CY24).
- Retail chains like Vishal Mart face staff shortages amid expansion.
Employee Expenses and Store Expansion
Q1 saw a 30.3% jump in employee benefits, to ₹346.9 crore.
- New stores: Added 9 outlets, taking the total to 424 as of June 30, 2025.
- Planned openings: Another 10–12 stores expected in H2 FY26.
Same-Store Sales and Operational Metrics
Like-for-like sales growth slowed to 7.1%, down from 9.1% in Q1 FY25.
- Sales per sq ft: Climbed sequentially to ₹8,779, still below the Q3 peak of ₹9,317.
Market Reaction
The stock fell 2.51% to ₹4,064.20 on the NSE on July 11, reflecting profit-booking and margin concerns.
“We remain confident in our model,” Noronha added, emphasising discipline in cost control and selective expansion.
