DMart’s Q2: Signs of Retail Revival, But Margin Worries Linger

Avenue Supermarts (DMart) posted a steady September 2025 quarter, giving shareholders some optimism about both consumer demand recovery and DMart’s resilience amid rising quick commerce competition. The highlight: like-for-like growth of 6.8%—an improvement over 5.5% last year—shows demand is firming up post-GST tweaks that reduced taxes on daily products. DMart grew its business area to 17.9 million sq ft and expanded its network to 432 stores, adding 8 new stores this quarter. Revenues rose nearly 15.5% year-on-year to ₹16,676 crore, showing healthy top-line momentum. But there are red flags shareholders can’t ignore. Operating profit margins slipped by 30 basis points to 7.3%, highlighting the pressure from higher costs and stiff price competition. Net profit rose just 3.8% to ₹684 crore, which is slower than revenue growth. Even as DMart’s stock outperformed the Sensex, moving up 6% in three months, the competition is heating up—rivals like Trent continue rapid store expansion and aggressive growth. DMart trades at over 80 times estimated FY26 earnings. Such lofty valuations seem to already factor in a robust recovery, making the risk-reward less appealing, especially given moderating profit growth and persistent cost challenges. For shareholders, DMart’s long-term growth prospects remain robust due to its dominant retail footprint and efficient model. However, high valuations and lower margins mean any slip in demand or further cost escalation could dent the stock. DMart remains a solid play on India’s consumption story, but sustained returns will depend on how well it controls costs and navigates rising competition.