Avenue Supermarts Ltd, the operator of retail chain DMart, reported steady revenue growth in the second quarter of FY26 but continued to face margin strain, prompting analysts to maintain a cautious outlook on the stock.
Revenue Up 15%, Profit Growth Moderates
For the quarter ended September 30, 2025, DMart’s standalone revenue rose 15.4% year-on-year to ₹16,219 crore, while EBITDA grew 11.3% to ₹1,230 crore.
Net profit increased 5.1% to ₹747 crore, with earnings per share (EPS) at ₹11.47, up from ₹10.92 in the same period last year.
On a consolidated basis, the company reported revenue of ₹16,676 crore, compared with ₹14,445 crore a year ago, EBITDA of ₹1,214 crore, and net profit of ₹685 crore.
Analysts Highlight Margin Pressure
Brokerages flagged persistent pressure on operating margins.
ICICI Securities said DMart’s EBITDA margin of 7.6% was slightly below estimates due to an “inferior sales mix” with a higher share of food items and increased staff costs to improve service quality.
Nuvama Institutional Equities noted that while margins remain tight, the pace of contraction has eased, marking the smallest decline in four quarters.
Revenue per sq. ft. rose 1.3% YoY to ₹8,692, while bill cuts grew 14% to 97 million, indicating strong customer footfalls but smaller basket sizes, ICICI Securities added.
Same-Store Growth Impacted by GST Rate Cuts
Analysts pointed out that GST rate reductions caused short-term disruptions in same-store performance.
DMart’s like-for-like (LFL) growth for stores older than two years came in at 6.8% in Q2FY26, slightly lower than 7.1% in Q1FY26.
ICICI Securities expects improvement in margins and growth momentum in the second half of FY26.
Store Expansion and E-Commerce Strategy
The retailer added eight new DMart stores during the quarter, taking its total count to 432 stores as of September 30.
Avenue Supermarts CEO-designate Anshul Asawa said,
“Following the government’s recent announcement on GST reforms, we passed on the benefit of reduced GST rates to all our customers. Two-year and older DMart stores grew by 6.8% during Q2FY26 compared to Q2FY25.”
In the digital segment, DMart Ready, the company’s e-commerce arm, added 10 new fulfilment centres but exited five cities, focusing instead on strengthening its presence in 19 metro markets.
Vikram Dasu, Whole Time Director and CEO of Avenue E-Commerce, said the shift underscores the company’s strategy to deepen penetration in key urban regions rather than expand geographically.
Summary
DMart reported 15% revenue growth in Q2FY26, but margin pressures persisted amid a weaker sales mix and rising operating costs. Analysts expect modest improvement in H2. The company added eight new stores and is refocusing its e-commerce footprint on major metro cities.
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