DMart Q1FY26 results preview: Margins to remain soft due to increased competition in metro area; check details

Avenue Supermart, which is India’s largest retail chain, is scheduled to announce its Q1FY26 results on Friday. The shares are in focus ahead of the results as the retail chain is expected to be impacted due to the rise of quick commerce. The shares are trading 15% lower over one year and 4% higher in 2025 on a YTD basis.

Q4FY25 preview

On a consolidated basis, the Q4FY25 revenue stood at ₹14,872 crore as compared to ₹12,272 crore in the previous year’s similar quarter. On an operational basis, the EBITDA for the quarter stood at ₹955 crore as compared to ₹944 crore, while the EBITDA margin contracted by 100 bps to 6.4% vs 7.4% in the same period last year. Lastly, net profit for the quarter stood at ₹551 crore as compared to ₹563 crore.

The growth was largely impacted due to poor gross margins due to increased competition in the FMCG business, and rising employee costs due to a shortage of skilled professionals in the business.

Management’s outlook

The management commentary remains cautiously optimistic about growth. The management expects the business to remain strong in non-metro towns in comparison to metro towns. The like-for-like growth in metro towns remains strong despite the lower density of stores in the metro areas. However, the margins are expected to remain soft in the metro towns, primarily due to increased competition from quick commerce platforms and higher operational costs.

Q1FY26 expectations

According to the latest business update, the Q1FY25 standalone revenue is expected to increase by 11% YoY to ₹15,936 crore. The revenue growth remains in low double digits, which is also expected to impact gross margins for the company. The EBITDA margins for Q4FY25 remain one of the lowest gross margin performances by the company. However, new store additions in metro and non-metro towns are expected to offset some impact of competition in the FMCG industry. On the bottom line front, the consensus analyst estimates suggest the EPS to increase by 4.4% to ₹13 per share as compared to ₹12.5 per share in Q1FY25.