Same Old Avenue for DMart

Avenue Supermarts Ltd, the operator of the DMart supermarket chain of stores, began FY26 on a dull note. Sure, standalone Ebitda margin for the three months ended June expanded from Q4FY25's multi-quarter lows, but the measure was down year-on-year (y-o-y) for the fifth straight quarter.

- Pallavi Pengonda

Q1FY26 Ebitda margin came in at 8.24%, up 146 basis points sequentially, but down 66 bps versus the same period last year. Consequently, Q1FY26 Ebitda at 1,313 crore grew 7.6% y-o-y, lower than the 10.8% growth seen in FY25.

Avenue's problems are pretty consistent. Continued competitive intensity within the fast-moving consumer goods (FMCG) space hurt gross margin. Further, operating costs jumped thanks to efforts to improve service levels, capacity building and inflation in entry-level wages. Nuvama Institutional Equities estimates pressure in margins will continue, given the competitive trends, and has cut FY26 and FY27 profit-after-tax estimates by about 6% and 8%, respectively.