Avenue Supermarts Expected to Witness Slower Q3 Revenue Growth Despite a 15.5% YoY Increase in Net Profit

Avenue Supermarts, the operator of DMart stores, is projected to reveal a deceleration in revenue growth for the fiscal third quarter, influenced by subdued festive demand and declining input costs. As per estimates from four brokerage firms, the standalone net profit for Q3FY24 is anticipated to reach Rs 740.6 crore, reflecting a 15.5% YoY rise.

Scheduled for announcement on January 13, Avenue Supermarts is expected to show a 17% YoY growth in standalone revenues, reaching Rs 13,247 crore in Q3FY24, a slowdown from the 18.5% growth witnessed in Q2FY24.

DMart’s EBITDA margin is predicted to remain relatively stable at around 8.3-8.5% in the third quarter. Axis Securities suggests an expansion in EBITDA margins due to improved operating leverage. During the quarter, DMart added only five stores, bringing the total to 341 as of December 31. The company’s sales per square foot are estimated to rise by 4.3% YoY to Rs 9455 in the October-to-December period, according to brokerage firm DART.

Despite the festive season moving to Q3FY24 from Q2, brokerages indicate weak discretionary demand during October-December. Motilal Oswal’s report highlights an industry-wide commentary signaling a persistent slowdown in the discretionary category, potentially impacting the non-food segment, which contributes 25-30% to Dmart’s total revenue.