Avenue Supermarts Ltd. (DMart) has always been described as “boring.” It sells groceries, staples, FMCG (fast-moving consumer goods) and some apparel at rock-bottom prices in no-frills stores.
There’s no glamour here. There is no brand-heavy advertising blitz, no celebrity endorsements.
Yet boring is precisely the point.
DMart doesn’t try to be everything to everyone. It wants to be the best value retailer in India.
The financials show the payoff. From Rs 48,840 crore in FY23 (financial year 2023), revenue jumped to Rs 59,358 crore in FY25, a CAGR (compound annual growth rate) of 17%.
Net profit came in at Rs 2,707 crore, excluding a one-off tax gain.
Margins moderated slightly to 7.9% at the EBITDA (earnings before interest, taxes, depreciation and amortisation) level, but DMart still generates industry-leading returns, with ROCE (return on capital employed) of 17.8% and ROE (return on equity) of 13.4%.
In a world where consumer stocks struggle to dole out mid-single-digit growth, DMart continues to clock mid-teens topline expansion.
The Store Machine
So what is it doing this time?
At the heart of DMart’s engine is store expansion.
It ended FY25 with 415 stores, adding 50 in the year, a record pace.
Management reiterated its strategy of adding 10–20% of the base store network every year. The company also pointed out that it already has the real estate and employee pipeline in place to support close to 600 stores, giving visibility well beyond its current base.
The strategy is clear.
The North, long underpenetrated, is finally opening up. Uttar Pradesh, Punjab and NCR (National Capital Region) are DMart’s new battlegrounds.
For a company that built its base in Maharashtra, Gujarat and southern India, this shift marks a new growth phase. As outgoing CEO (chief executive officer), Neville Noronha put it in his last analyst call, “North India is where the white spaces are.”
“If you want to accelerate store expansion, which probably over the next six months to eight months, I’m going to put disproportionate time personally also, because North of India is what I’m going to handle from a real estate standpoint”, he added.
The economics are compelling. A non-metro store with Rs 300 crore in capex (capital expenditure), including land, pays back in five years. Excluding land, the payback drops to just 2.5 years. In an industry notorious for burning cash, DMart’s brick-and-mortar rollout is surprisingly efficient.
The Private Label Moat
Equally important is the 20-20-20 formula for private labels: categories where DMart can
- grab 20% market share,
- price 20% lower than brands and
- earn 20% higher margins.
This is more than a margin story.
Private labels add to customer stickiness. When shoppers find reliable, cheaper alternatives at DMart, they have little incentive to switch. Already, shelf space in home care and personal care is being taken up by DMart’s exclusive brands.
But when categories mature and brands fatten their margins, DMart has every incentive to swoop in with its labels.
Over the long run, this becomes a moat that few rivals can breach.
Quick Commerce Isn’t a Threat
For years, critics have said quick commerce like Blinkit, Zepto, Swiggy Instamart, would undercut DMart, and perhaps lead to its demise.
The latest data suggests otherwise. A basket of common SKUs (stock-keeping units) was 20% more expensive on Blinkit and 19% on Swiggy versus DMart.
The reason is structural. Quick commerce incurs costs for picking, packing and delivery. DMart doesn’t.
At scale, DMart can live with 14–15% gross margins, while quick commerce needs 20%+. Matching DMart on price would be suicidal for them. The real fight for quick commerce is against kiranas, not against DMart.
The CEO Transition
The other big theme is leadership. Neville Noronha, who built DMart into a retail powerhouse, is stepping down. He joined the company in 2004 after about eight years at Hindustan Unilever, where he worked in market research, sales, and modern trade. His successor, Anshul Asawa, is also a Unilever veteran.
Asawa has spent his first months immersing himself in DMart’s culture, stores and supply chain.
His early message?
Don’t fix what isn’t broken.
“The fundamentals are strong. The culture doesn’t need to change. What’s needed is scale, talent and acceleration,” he said.
In other words, the baton handover looks smooth, with no radical shift in strategy.
Margins and Risks
For all the good news, some turbulence lingers.
DMart’s near-term numbers will be volatile. More store openings mean higher upfront costs and staff additions. Employee cost per store is expected to rise, squeezing margins.
Moreover, quick commerce could evolve in unpredictable ways, FMCG (fast-moving consumer goods) companies might get more aggressive with D2C (direct-to-consumer) channels and inflation in food staples could test DMart’s low-price positioning.
Yet investors who focus only on quarterly swings risk missing the bigger picture.
Over time, lower-cost stores in smaller towns, scale-driven efficiencies and private label penetration should strengthen profitability.
What DMart also has going for it is discipline. It doesn’t chase fads, doesn’t splurge on advertising wars and doesn’t open loss-making stores just to pump up sales. In a world of retail hype cycles, boring may well be the smartest strategy.
The Valuation Puzzle
DMart trades at 105x earnings.
That is undeniably high and for the company to deliver meaningful returns from this base will not be easy.
But India’s modern retail penetration is still a fraction of China’s. This gives DMart a long runway, but to justify the valuation, it will have to keep expanding stores, deepen private labels and maintain its cost advantage without slipping.
The Long Game
“DMart is dead” stories will continue. They sell well in the short term. But every time, DMart adapts, grows and compounds.
Investors who stuck with it since listing in 2017 have seen the stock multiply seven times over.
The next decade could be similar.
With North India expansion, private labels scaling up and store economics intact, DMart is laying the foundation for another long run.
So, yes, margins may wobble. Yes, the PE (price-to-earnings) looks rich. Yes, competition is noisy. But in the long sweep of Indian retail, DMart still looks like the only steady compounding machine. How the stock price performs is, ofcourse, a totally different matter.
Disclaimer
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s) and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.