Avenue Supermarts Q2 profit rises 7.6%, margins slip

Avenue Supermarts (

) reported slower profitability despite stronger revenue growth in Q2FY27. The DMart operator delivered 18.4% revenue growth in Q2FY27, an improvement from the previous quarter. EBITDA rose 14% YoY to ₹1,403 crore, while net profit increased only 7.6% YoY to ₹804 crore. The company added 15 stores during the quarter, taking its total store count to 518. What matters is that revenue growth and earnings growth are moving in different directions. Staff costs rose 20%, other expenses increased 22.5%, and both outpaced sales growth. Gross margin also contracted to 14.15%. At the same time, EBITDA per store and per square foot declined, suggesting store productivity remains under pressure. The headline growth number may therefore hide a profitability challenge. Faster store additions and higher retail area growth have not yet translated into proportionately stronger earnings. Competition from quick-commerce players continues to affect store footfalls and planned purchases, especially in larger cities. Rising debt is another factor to monitor, with total debt increasing to ₹4,079 crore from ₹2,267 crore six months earlier, contributing to sharply higher interest costs. Looking ahead, investors should watch three indicators closely: like-for-like store growth, margin recovery, and the pace at which newer stores achieve mature productivity levels. Management expects store additions to accelerate in the second half, but sustainable earnings growth will depend on whether expansion can improve returns rather than dilute them. View: Revenue momentum has improved, but margin pressure and slower profit growth remain the bigger story. A sustained recovery in store productivity would be a stronger positive signal than store additions alone. Disclosure: This post is for information and education purposes only and should not be construed as investment advice. Please consult your financial adviser before making any investment decisions.