Avenue Supermarts (DMart) Q4 FY26: Strong Growth with Operating Leverage

Q4 Highlights • Revenue: ₹17,683.86 Cr (↑18.9% YoY) • EBITDA: ₹1,210.53 Cr (↑26.8% YoY) • EBITDA Margin: 6.85% (↑42 bps YoY) • PAT: ₹656.59 Cr (↑19.2% YoY) What Stands Out • Operating leverage visible – EBITDA growth outpaced revenue • Controlled cost growth (other expenses ↑12% vs revenue ↑18.9%) • Margin expansion despite expansion phase Full Year FY26 Snapshot • Revenue: ₹68,821 Cr • EBITDA: ₹5,187 Cr • EBITDA Margin: 7.54% (almost flat YoY) • PAT Growth (normalized): ~11.2% YoY Expansion Story • 85 stores added (vs guidance >50) • Total stores: 500 • Store growth: 20.5% (upper end of guidance) • Revenue growth ahead of store growth → strong same-store performance Key Challenges • Employee Cost: ₹1,541 Cr (↑32.2% YoY) – growing 2x revenue • Finance Cost: ↑104.5% YoY (lease-driven under IndAS 116) • DMart Ready: ~₹253 Cr annual PAT drag Cash Flow & Capex • Operating Cash Flow: ₹3,466 Cr (strong, 1.17x PAT) • Capex: ₹4,113 Cr → Negative FCF (₹646 Cr) • Debt: Low (D/E ~0.10x) Why It Matters DMart continues to deliver consistent growth with strong execution, but rising costs and DMart Ready losses remain key monitorables. Learning Outcome High-growth retail businesses often show strong operating cash flows but negative FCF due to expansion. Investors should track cost control and profitability of new ventures.