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DMart parent Avenue Supermarts' Q2 EBITDA margin slips to 7.3%, below 7.7% poll estimate; shares fall 4%
Our read
Avenue Supermarts will more likely than not hold its EBITDA margin near 7.3% for the next couple of quarters as it chooses price and volume over margin.
For operators
DMart's EBITDA margin slipped to 7.3% from 7.6% a year earlier and missed the 7.7% poll estimate, so rival grocery operators should expect pressure on pricing and cost discipline as the value leader gives up some margin.
Watch
EBITDA margin above the 7.3% reported, in the December-quarter results, would mean the squeeze is easing and rivals' discounts are not forcing DMart to give up more.
Ask next
How do DMart's results compare with its rivals?The report,
Avenue Supermarts (DMart) had an EBITDA margin of 7.6% a year earlier, so the September-quarter figure is a decline. Its shares fell as much as 4% on 12 October, after results released over the weekend.
- Q2 EBITDA margin, reported7.3%
- Q2 EBITDA margin, year earlier7.6%
- CNBC-TV18 poll estimate7.7%
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Why it matters to operators and investors
Avenue Supermarts shares fell as much as 4% on 12 October after the September-quarter EBITDA margin of 7.3% missed the 7.7% CNBC-TV18 poll estimate and came in below last year's 7.6%, so watch whether the margin recovers before you add to positions.
What to watch next
- Gross margin and cost commentary on the earnings call
- Pace of new store openings in the next quarterly update
- Discounting by quick-commerce and hypermarket rivals in DMart's core cities
- Share price against the 4% intraday fall on 12 October
Background
Later reports that look back at earlier events in this story, newest first. They add context; nothing on this page has changed.
Resurfacing a 13 July note: ICICI Securities cuts Avenue Supermarts target to Rs 3,700 from Rs 4,200, keeps Hold
On the record
Earlier DMart reports on RetailIntel, newest first.
- : DMart adds 15 stores in 2Q to reach 518; Motilal Oswal stays Neutral, trims target to Rs 3,925 after profit miss
- : Prabhudas Lilladher downgrades Avenue Supermarts to Reduce, cuts target price to Rs 3,214 from Rs 4,027
- : DMart Q2 net profit rises 8.5% to ₹743.5 crore as revenue climbs 17.8% to ₹19,644 crore
- : Jefferies cuts DMart target to Rs 4000 from Rs 4500 after Q2 margin miss; Citi trims to Rs 3250
The source
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