News

Published: May 15, 2023
Updated: May 15, 2023

DMart Reports Strong Revenue Growth, but Declining Margins Impact Share Performance as Consumer spending declines

DMart Shares Experience 11.04% Decline, Benchmark Sensex Also Falls

DMart shares closed 11.04% lower at ₹1,395.75 apiece on the BSE, reflecting a significant drop in share value. The benchmark Sensex also experienced a decline of 0.43%, closing the day at 35,853.56 points.

Revenue from Operations Shows Impressive Growth

Avenue Supermarts, the company that owns DMart chain, reported a notable increase in revenue from operations. The figures rose by 21.11% to ₹10,337.12 crore, compared to ₹8,606.09 crore in the corresponding quarter of the previous fiscal year.

Profit After Tax Sees Increment, Margin and EBITDA Performance

For the quarter ending March 2023, DMart reported a standalone profit after tax of ₹505.21 crore, marking an 8.3% rise from ₹466.35 crore in the same quarter last year. However, the company experienced a decrease in margins, dropping from 8.6% to 7.6% on a year-on-year basis. The earnings before interest, taxes, depreciation, and amortization (EBITDA) saw a 5.5% increase, reaching ₹783 crore.

Store Expansion and Impact on Consumer Spending

During the March quarter, DMart expanded its retail chain by opening 18 new stores, bringing the total count to 324 as of March 31, 2023. The CEO and MD of Avenue Supermarts, Neville Noronha, highlighted the impact of lower consumer spending in general merchandise and apparel, which contributed to the decline in margins. However, the company's stores that are two years or older showed growth of 24.2% in FY2023 compared to FY2022.

Financial Performance for the Full Year

For the full year ending March 2023, DMart reported a significant increase in revenue, reaching ₹42,840 crore, a 38% growth compared to the previous fiscal year. Net profit for the same period amounted to ₹2,379 crore, reflecting a 59% increase from ₹1,493 crore in FY22.

Share Performance declines amidst lower consumer spending

DMart's share performance on Friday saw a 0.62% decline, closing at ₹3,680.25 on the BSE. While the company reported strong revenue growth and an increase in profit, the decline in margins impacted investor sentiment. The expansion of store locations and the steady growth of older stores indicate the company's long-term potential. However, managing consumer spending in certain sectors remains a challenge. DMart will need to address these concerns to regain market confidence and sustain its growth trajectory