DMart Q4 results: Share price falls over 4% as Q4 margins disappoint

Avenue Supermarts reported standalone net profit of ₹505.21 crore for the quarter ended March 2023, registering a growth of 8.3% from ₹466.35 crore in the corresponding quarter last fiscal.

Radhakishan Damani-owned Avenue Supermarts reported revenue at ₹10,337.12 crore, up by 21.11% as against ₹8,606.09 crore in the corresponding quarter in the last fiscal.

However, in Q4FY23, DMart’s EBITDA margin contracted by 110 bps to 7.3% as compared to 8.4% on a year-on-year basis while EBITDA was up 4% at ₹772 crore.

“Lower consumer spending in general merchandise and apparel continues and has impacted the margin mix downwards,” said Avenue Supermarts CEO and MD Neville Noronha.

Read here: DMart Q4 results: Net profit up 8.3% to ₹505.21 cr, revenue up 21%

Global brokerage Morgan Stanley said that Avenue Supermarts’ top-line growth moderated on a 4-year basis and Q4 EBITDA margin were below estimates. It believes lower demand for better margin apparel and general merchandise categories remains a challenge for the company.

It has Equal-weight rating on the stock with a target price of ₹3,853 per share.

Brokerage house Prabhudas Lilladher cut EPS estimates of DMart by 4/5% for FY24/25 and target price to ₹4,447 from ₹4,561 earlier following disappointing margin performance led by 30% higher bill cuts/store but 22.8% lower average bill value in 2H23, decline in share of higher margin general merchandise and apparel in 2H23 and benefit from higher store openings in mature clusters.

Meanwhile, during the quarter under review, DMart expanded its retail chain by opening 18 new stores, bringing the total number of stores to 324 as of March 31, 2023 . In FY2022-23, the company has added a total of 40 stores to its network.

At 9:40 am, the shares of Avenue Supermarts were trading 3.43% lower at ₹3,553.85 apiece on the BSE. 

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