All eyes are on Avenue Supermarts Ltd, the retail giant backed by veteran investor Radhakishan Damani, as it prepares to announce its financial results for the December quarter (Q3FY26) on Saturday, January 10. The company, which operates the popular DMart supermarket chain, is anticipated to report a period of moderated growth, with a steady increase in sales but potential pressure on its profitability margins.
Business Update and Store Expansion
The company has already provided a glimpse into its quarterly performance through a regulatory filing last Friday, January 2. DMart reported standalone revenue from operations of ₹17,612.62 crore for Q3FY26. This figure marks a 13.15% year-on-year increase from the ₹15,565.23 crore recorded in the same quarter of the previous fiscal year (Q3FY25).
On the expansion front, DMart continued its growth trajectory by adding 10 new stores during the quarter. This brings its total store count to 442 across the country. It is worth noting that one store located in Sanpada, Navi Mumbai, Maharashtra, is currently closed for customers due to reconstruction activities.
Analyst Expectations and Margin Concerns
Market analysts largely expect the official results to align with the disclosed business update, indicating a flat to positive outcome. Seema Srivastava, Senior Research Analyst at SMC Global Securities, noted that the nearly 13% revenue growth reflects sustained demand in essential retail and steady consumer spending across both food and non-food categories.
However, the spotlight will be firmly on the company's margins. Analysts unanimously flag concerns regarding profitability. Operating margins are likely to remain under pressure due to persistently high operating and input costs. The trend in recent quarters, where revenue growth has outpaced net profit expansion, is expected to continue, indicating ongoing margin compression.
This compression is primarily driven by general cost inflation and intense competitive pricing in the retail sector, particularly from the growing quick-commerce segment.
Brokerage Projections for Q3FY26
Leading brokerage firms have outlined their specific forecasts for DMart's quarterly performance:
Motilal Oswal Financial Services anticipates consolidated revenue growth of nearly 13% year-on-year, largely fueled by new store additions. However, they project a more modest Profit After Tax (PAT) growth of around 5%. The brokerage expects the EBITDA margin to contract by approximately 35 basis points year-on-year to 7.3%, citing continued higher retailing costs and lower gross margins.
Nuvama Wealth Management, looking at standalone numbers, forecasts a 13.20% rise in revenue and a 6% growth in core PAT. Their projection sees the EBITDA margin slipping to 7.50% in Q3FY26 from 7.90% in Q3FY25. They attribute this to a stable general merchandise and apparel mix but increasing competitive pressures.
What Investors Will Watch Closely
Beyond the headline numbers, investor focus will be sharp on several key areas. Any movement, whether improvement or deterioration, in gross and EBITDA margins will be critically dissected. Furthermore, the management's commentary will be pivotal.
Analysts like Srivastava emphasize that updates on the momentum of store additions, measures taken to control costs, achieved supply-chain efficiencies, and the strategy for expansion into tier-II and tier-III cities will be essential. These factors will help assess the sustainability of DMart's growth and the potential for margin recovery in the medium to long term.
In the previous quarter (Q2FY26), DMart had reported a 15.4% jump in revenue from operations to ₹16,676.3 crore, while net profits rose by 3.9% to ₹684.8 crore.
On the trading front, DMart's share price closed 0.43% higher at ₹3,805.10 on the BSE on Friday, January 9. The stock gained over 2% for the week ending January 9, successfully breaking a seven-week losing streak, even amidst a broader market selloff.
