Radahkisham Damani’s Avenue Supermarts, operator of popular retail chain DMart, has been struggling with growth for the last few years, and the margins have remained capped at 7-9%. Motilal Oswal highlighted that the company’s productivity remained weak in the second quarter of FY26. Despite that, the brokerage house maintained its ‘Buy’ rating on the retail stock.
Motilal Oswal on Avenue Supermarts: Margins to remain under pressure
The operator of DMart stores’ standalone revenue came in at Rs 16,200 crore in Q2 FY26, which grew 15.4% year-over-year due to a weak base of 14% YoY in Q2FY25. This was slightly weaker than the brokerage’s pre-quarter growth estimate of 17% YoY. “DMart has been facing margin pressure over the past few quarters, and given likely muted same-store sales growth (SSSG), we expect margin pressures to continue in Q2 FY26,” added Motilal Oswal.
DMart’s revenue growth was largely driven by 13% YoY store addition and likely mid-single digit SSSG. DMart added eight stores during the second quarter (17 in H1 FY26 as against 12 in H1 FY25), taking the total count to 432 stores.
However, acceleration in store additions remains the key monitorable for DMart, said Motilal Oswal. “We estimate 60 net store additions in FY26 (compared to 50 in FY25),” added the brokerage.
Avenue Supermarts Q1 FY26 results
The company posted a slight decline in net profit to Rs 772.97 crore in Q1 FY26, from Rs 773.82 crore reported in the same quarter a year ago. Sequentially, net profit rose 40.2% from Rs 550.90 crore recorded in Q4 FY25.
The company’s revenue from operations increased 16.3% YoY to Rs 16,359.70 crore in Q1 FY26, up from Rs 14,069.14 crore in Q1 FY25. Compared to the last quarter, the revenue increased by 10% quarter-on-quarter in Q1 FY26, from Rs 14,871.86 crore reported in Q4 FY25.
Avenue Supermarts stock performance
The share price of Avenue Supermarts has fallen 5.5% in the last five trading sessions. The stock has declined 9% in the past one month. The stock has corrected by over 5% in the last one year.