How is intense competition from 10-minute delivery platforms impacting DMart? The retail chain, which relies heavily on offline stores, added 85 stores in FY26 and is expected to add another 150 stores by FY28. However, it is witnessing slow sales growth at its older metro stores. Its online grocery business, DMart Ready, has also exited 14 cities over the last 15 months.
The bigger question now is whether DMart will be able to withstand the intensifying competition in the quick commerce sector, which is already dominated by established players such as Blinkit and Zepto.
Most industry experts expect competitive intensity to remain high as the 10-minute delivery model continues to gain market share. According to Anand Rathi, India’s quick commerce market is expected to grow to $60 billion by FY31. Even so, analysts remain positive on DMart’s long-term prospects despite being cautious about its near-term outlook. Here’s why.
DMart faces intense competition from 10-minute delivery
Pankaj Kumar, VP Fundamental Research, Kotak Securities in conversation with financialexpress.com, pointed out that Q1FY27 performance reflected rising competitive pressure from quick commerce, with same-store sales growth (SSSG) moderating to 5.5% from 10.8% in Q4FY26.
“We expect competitive intensity to remain elevated, with the ten-minute delivery model continuing to gain share. Consequently, we have also trimmed our valuation for DMart Ready,” Kumar added.
Older store growth slows
The company’s standalone revenue grew 15.1% year-on-year (YoY) in Q1FY27. ICICI Securities believes the growth came mainly from new store additions rather than stronger sales at existing outlets, as the company’s older stores in metro areas saw flattish growth. Consumers increasingly shifted to online platforms during the strong summer season, reducing visits to physical stores.
ICICI Securities noted that non-metro markets helped offset the weakness, but DMart’s sales productivity still declined, with revenue per square foot falling about 2.5% YoY to Rs 8,571.
Consumer spending slows across categories
Growth moderated across all major product categories during the quarter. Food sales, the largest contributor to revenue, grew around 14% year-on-year, slower than the previous quarter. Non-food FMCG sales increased around 15%, while general merchandise and apparel remained the fastest-growing category with around 19% growth.
The share of the higher-margin GM&A category increased to 25.5%, supporting profitability despite slower sales growth.
“We believe rising competition from quick commerce is likely to limit growth across modern trade and D’Mart Ready.” PL Capital pointed out.
New store additions weigh on bills per store
Dmart’s bill cuts increased 13.4% YoY to 110 million, but bills per store per day declined as the large number of stores opened in the previous quarter affected throughput. Average bill value increased 1.3% YoY to Rs 1,709, although it declined sequentially. DMart’s like-for-like (LFL) sales growth slowed to 5.5%, compared with 10.8% in the previous quarter.
DMart continues betting on store expansion
Despite this, DMart is expected to continue investing in new stores.
The company added three stores during the quarter, taking its total store count to 503. Its retail business area expanded to 20.7 million square feet. PL Capital expects DMart to add around 75 stores each in FY27 and FY28.
The company’s board has approved the issuance of Rs 10 billion worth of non-convertible debentures (NCDs), which Motilal Oswal believes could help fund faster store expansion in the coming quarters.
Motilal Oswal believes steady store expansion and healthy like-for-like (LFL) sales growth will drive DMart’s growth over the medium term. DMart is expected to deliver a compound annual growth rate (CAGR) of 18% in revenue, 19% in EBITDA, and 16% in profit between FY26 and FY29. According to Motilal Oswal, this growth will be driven by steady store expansion and healthy like-for-like sales growth over the medium term.
DMart Ready exits 14 cities in 15 months
At a time when quick commerce is expected to rise as the number of monthly active shoppers is projected to nearly triple to 105-115 million by FY31 (according to Anand Rathi), Dmart Ready, the online grocery business, exited 14 cities in last 15 months and now operates in just 11 cities, down from 25 cities in FY25.
ICICI Securities said the move reflects the company’s focus on improving unit economics and home delivery efficiency rather than pursuing aggressive expansion.
“In our view, the digital business remains a defensive strategy to protect urban market share rather than a primary growth driver. This is also consistent with our understanding of the sector, where most offline retailers are cautious about scaling e-comm given the high cash burn and thin margins,” ICICI Securities noted.
“We believe DMART’s measured approach to digital retail is pragmatic, but it does not yet provide a meaningful earnings lever,” ICICI Securities.
Margin pressure likely to persist
Brokerages expect competition from quick commerce to remain intense, keeping pressure on DMart’s same-store sales and margins in the near term. Even so, they believe the company’s aggressive store expansion, improving product mix and disciplined capital allocation should support earnings growth over the medium term, provided demand in metro markets recovers.
PL Capital expects Dmart’s EBITDA margins to decline to 7.4% in FY27 and 7% in FY28, lower than FY26 levels, as operating costs remain elevated.
ICICI Securities believes that unless demand in metro markets improves, meaningful margin expansion is unlikely for Dmart.