 "DMart rises 6%, sees sharpest rally in 10 wks; zooms 14% thus far in March")
DMart share price: Avenue Supermarts, owner of DMart retail chain, shares have rallied 6 per cent to Rs 3,876.90 on the BSE in Thursday’s intra-day trade amid heavy volumes in otherwise a subdued market as lower inflation is expected to enhance discretionary product mix and margins.
India’s retail inflation eased to a seven-month low of 3.61 per cent in February 2025, down from 4.31 per cent in January, as food price pressures softened, according to government data released on Wednesday. This brings inflation below the Reserve Bank of India’s (RBI) medium-term target of 4 per cent for the first time since August 2024.
Today, the stock price of the company recorded its sharpest intra-day gain in the past 10 weeks. Earlier this year on January 3, 2025, Avenue Supermarts (DMart) share surged 15 per cent in intra-day trade after the company released its December 2024 quarter (Q3) business update. Currently, the stock is trading at its highest level since February 6, 2025. It bounced back 16 per cent from its 52-week low price of Rs 3,337.10 touched on March 3.
At 12:33 PM, DMart was quoting 5 per cent higher at Rs 3,860, as compared to 0.04 per cent decline in the BSE Sensex. The average trading volumes on the counter jumped nearly three-fold. A combined 2.19 million equity shares have changed hands on the NSE and BSE.
Thus far in the month of March, the stock has outperformed the market by surging 14 per cent, as compared to 1 per cent rise in the BSE Sensex. However, in the past six months, DMart has underperformed the market by falling 25 per cent, as against 11 per cent decline in the BSE Sensex.
DMart is a national supermarket chain that offers customers a range of home and personal products under one roof. The company offers a wide range of products with a focus on Foods, Non-Foods (FMCG) and General Merchandise & Apparel product categories. The Company offers its products under various categories, such as grocery and staples, dairy and frozen, fruits and vegetables, home and personal care, bed and bath, crockery, footwear, toys and games, kids’ apparel, apparel for men & women and daily essentials.
In Q3FY25, DMart’s consolidated revenue grew by ~18 per cent year-on-year (Y-o-Y) with like-for-like (LFL) growth at 8.3 per cent, below analyst’s estimates. Earnings before interest, tax, depreciation and amortisation (Ebitda) grew 9 per cent Y-o-Y, while Ebitda margins declined by 63bps Y-o-Y to stand at 7.6 per cent. This was owing to higher discounts, continued pressure on the General Merchandise and Apparel (GM&A) category, and higher gestation period for larger and newer stores.
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The management had said the company continued to see increased intensity in discounting in the FMCG category and the consequent impact to high turnover per square feet stores in metro towns. However, in the Q3FY25 quarter, the impact has relatively reduced versus the previous quarter (Q2FY25).
Meanwhile, Anshul Aswa, previously with Unilever, assumed the role of CEO from March 2025 as Neville Noronha, the current Managing Director and CEO will step down in January 2026, to ensure a smooth transition. Anshul is expected to take over as the MD and CEO on the 1st of February, 2026, upon the completion of Neville's term in that position.
This transition will be closely watched as it may signal potential shifts in strategic direction or operational priorities, according to analysts at Axis Securities.
The brokerage firm believes DMart will continue to face challenges in optimising its overall store metrics in the near-term due to several factors such as increasing competition from both organised players (Reliance, Star Bazzar, Zudio) and online players (Zepto, Blinkit, Instamart) resulting in erosion of market share in metros and smaller towns.
The higher discounts to mitigate the impact on rising competition impacting the overall profitability and discretionary demand continuing to remain subdued with a meaningful recovery anticipated only from FY26 onwards, and larger and newer stores having higher gestation periods, thereby impacting the overall store matrix performance, the brokerage firm said.
The increasing prevalence of online grocery formats, particularly in major metropolitan areas has recently led to a moderation in topline growth. Analysts at Geojit Financial Services anticipate continued margin pressure in the short term due to competition. However, DMart’s robust balance sheet, with no debt and strong operational efficiency, will support ongoing store expansions, fostering future revenue growth. Furthermore, lower inflation is expected to enhance discretionary product mix and margins.