D-Mart Delivers on Growth, But Margins & SSSG Raise Concerns

which operates the D-Mart retail chain, reported a 16.2% YoY increase in standalone revenue for Q1 FY26 at ₹15,932 crore, compared to ₹13,711 crore in Q1 FY25. However, despite strong topline growth, net profit remained nearly flat, coming in at ₹773 crore, just a marginal change from ₹773.8 crore a year ago. The company continues to face margin pressure due to rising operational expenses and deflation in some product categories. Operating EBITDA for the quarter stood at ₹1,299 crore, up from ₹1,221 crore in Q1 FY25, but EBITDA margin dropped to 7.9% (from 8.7% YoY). Similarly, the PAT margin narrowed to 4.7%, compared to 5.5% in the same quarter last year. This was largely due to price deflation (100–150 bps impact) in staples and non-food segments, combined with higher expenses related to wage increases and customer service enhancements. During the quarter, D-Mart added 9 new stores, bringing the total store count to 424 as of June 30, 2025. The Same Store Sales Growth (SSSG) for stores older than two years stood at a healthy 7.1% YoY. While store expansion continues, competition from both organized and online retailers remains intense. Management highlighted that while demand remains stable, the shift toward value-driven consumption and pricing competition is putting pressure on gross margins. The company is also investing in long-term infrastructure and capacity building, which adds to the near-term cost burden. The key takeaway: revenue growth remains healthy, but profits are not keeping pace—driven by cost pressures and subdued same-store growth. Monitoring margin trajectory and SSSG performance will be critical in upcoming quarters.