Avenue Supermarts Q2 FY26 Financial Performance & Outlook

Avenue Supermarts (DMart) has reported its financial results for the quarter ending September 2025, revealing a mixed performance characterized by steady top-line growth but significant pressure on profitability and margins. Key Financial Highlights: Revenue: The company registered a 15.5% year-on-year (YoY) growth in revenue, reaching ₹16,676.3 crore compared to ₹14,444.5 crore in Q2 FY25. This growth is marginally below its 3-year CAGR of 15.8%. Net Profit: Profitability saw a muted increase, with net profit growing by only 3.9% YoY to ₹685 crore from ₹659 crore. This indicates significant cost pressures. EBITDA & Margins: EBITDA increased by 11% YoY to ₹1,213.8 crore. However, a key point of concern is the margin contraction. The EBITDA margin narrowed by 29 basis points (bps) to 7.28% from 7.57% in the prior year, falling short of brokerage expectations. Operational Update: The company continued its network expansion by adding 8 new stores during the quarter, bringing the total store count to 432. Analyst Sentiment & Market View: The results have been met with caution from market analysts. The primary concerns revolve around weaker-than-expected sales growth, the inability to sustain high Same-Store-Sales Growth (SSSG), and the resulting margin erosion. JPMorgan: Maintains a 'Neutral' rating (Price Target: ₹4,350), noting that revenue growth will likely weigh on the stock's near-term performance. HSBC: Recommends 'Reduce' (PT: ₹3,700), highlighting that store additions cannot compensate for muted SSSG. Goldman Sachs: Reiterates a 'Sell' rating and cut its PT to ₹3,370, citing disappointing sales growth despite a low base. While the stock has gained over 20% year-to-date in 2025, investors should note the prevailing concerns regarding margin pressure and slowing growth momentum reflected in these results and analyst commentary.