DMart Q1 Results Preview: Avenue Supermarts PAT may rise up to 8%, revenue seen up 18% on new store additions

Avenue Supermarts, the parent company of DMart stores, is set to announce its Q1FY26 consolidated earnings on July 11, 2025. Industry experts and brokerages anticipate robust revenue growth driven by new store additions but foresee pressure on margins due to rising operational expenses and gross margin contraction.

Strong revenue growth fueled by store expansion

Avenue Supermarts is expected to report revenue between Rs 15,932 crore and Rs 16,348 crore, marking a healthy 16-18 per cent year-on-year (YoY) increase in Q1FY26. This growth is primarily attributed to the addition of nine new stores during the quarter, bringing the total store count to 424. Sales per square foot are projected to grow by 2 per cent YoY to Rs 9,200, reflecting steady same-store sales growth (SSSG) despite increasing competition in retail markets across metros and tier 1 and 2 cities.

EBITDA margin contraction amid higher expenses

While the company’s EBITDA is forecasted to rise by approximately 10.5 per cent YoY to Rs 1,349 crore, margins are expected to contract due to increased operational costs and lower gross margins. Analysts predict the EBITDA margin to decline from 8.7 per cent last year to around 8.2 per cent in Q1FY26. This margin pressure is driven by higher employee costs and competitive market dynamics as Avenue Supermarts aggressively expands its footprint.

Profit after tax (PAT) growth outlook

Brokerages provide varying profit estimates, with JM Financial forecasting PAT of Rs 869 crore, up 7 per cent YoY, supported by a significant 40 per cent quarter-on-quarter (QoQ) increase. Axis Securities estimates a more conservative PAT growth of 5.6 per cent YoY at Rs 817 crore, while HSBC remains optimistic with a 10 per cent PAT rise to Rs 892 crore. Despite the positive revenue trends, all analysts agree margins will remain under pressure due to higher operational expenses.

Key market factors to watch

Investors should monitor key factors such as demand trends in metros and tier 2/3 cities, competitive intensity, and the company’s ability to control costs amidst its rapid store expansion. Avenue Supermarts’ focus on quick commerce and store network growth is expected to be a critical driver for future earnings.

Overall, Avenue Supermarts’ Q1FY26 results are expected to show strong revenue growth fueled by store expansion but with margin pressures impacting profitability. Retail investors and market watchers should closely track earnings updates for a clearer picture of the company’s growth trajectory in India’s competitive retail landscape.