Has DMart's Profit Declined Slightly in Q1 FY26 Despite Revenue Growth?
Click to start listening
Synopsis
Avenue Supermarts Ltd, which operates DMart, has reported a slight decline in net profit for Q1 FY26, raising questions about its financial health amidst rising revenues. The company has opened new stores but faces competitive pressure affecting margins.
Key Takeaways
- DMart's net profit fell slightly year-on-year.
- Revenue increased by over 16% due to more stores and footfalls.
- Competition and margin pressure affected profitability.
- Nine new stores were opened, bringing the total to 424.
- FMCG sector competition continues to impact gross margins.
Mumbai, July 11 (NationPress) Avenue Supermarts Ltd, which operates the DMart retail chain, reported a slight decrease in its consolidated net profit for the first quarter of FY26 compared to the same period last year (YoY), as per the company's filing on Friday.
The Mumbai-based retailer recorded a consolidated net profit of Rs 772.10 crore for the quarter ending June 2025, which is a minor decline from Rs 773.68 crore in the corresponding quarter the previous year.
In contrast, revenue from operations surged by over 16 percent year-on-year, reaching Rs 16,359.7 crore, an increase from Rs 14,069 crore in Q1 FY25, fueled by a steady increase in store numbers and customer visits.
However, the filing noted that the company's operating performance faced challenges, as competitive pressures and margin constraints impacted profit margins despite robust revenue growth.
“In Q1 FY26, our revenue grew by 16.2 percent year-on-year, while profit after tax (PAT) increased by 2.1 percent. Stores that have been operational for two years or more grew by 7.1 percent compared to Q1 FY25,” stated Neville Noronha, CEO and Managing Director of Avenue Supermarts Limited.
The revenue growth was negatively influenced by approximately 100-150 basis points primarily due to significant deflation in various staple and non-food items. Furthermore, gross margins were lower compared to the previous year, attributed to ongoing competitive pressures within the FMCG sector, Noronha added.
The retail chain opened nine new stores during the quarter, bringing the total to 424 stores as of June 30.
The company’s shares closed down by 2.40 percent at Rs 4,069 each.
Previously, Avenue Supermarts Ltd, led by Radhakishan Damani, reported a substantial decline in consolidated net profit to Rs 550.79 crore in Q4 of FY25, from Rs 719.28 crore in the same quarter a year earlier.
Point of View
I find that while Avenue Supermarts Ltd's revenue growth is commendable, the decline in net profit highlights the challenges faced by the retail sector. This situation demands attention as it reflects broader trends in consumer behavior and market competition. Thus, staying informed is essential for stakeholders.
NationPress
15/08/2025
Frequently Asked Questions
What caused DMart's profit decline in Q1 FY26?
The slight profit decline was attributed to increased competition and pressure on margins, despite a notable rise in revenue.
How much did DMart's revenue increase in Q1 FY26?
DMart's revenue rose by over 16 percent year-on-year, reaching Rs 16,359.7 crore.
How many new stores did DMart open in Q1 FY26?
DMart opened nine new stores during the quarter, bringing its total to 424.
What impact did deflation have on DMart's revenue growth?
The revenue growth was impacted by approximately 100-150 basis points due to significant deflation in many staple and non-food products.
What was DMart's consolidated net profit for Q1 FY26?
DMart reported a consolidated net profit of Rs 772.10 crore for Q1 FY26.
