DMart: Market not impressed by Q3 earnings as stock closes with marginal gains; what should investors do next?

livemint.com:

Avenue Supermarts, which operates the retail chain of DMart, has failed to impress investors with its Q3 FY24 earnings, as the company's shares in today's trading session ended with a modest 0.37% gain at ₹3,855 apiece. The company released its Q3 FY24 (third quarter) numbers on Saturday (January 13), posting a 17.2% YoY growth in its consolidated revenue from operations at ₹13,572 crore, as compared to ₹11,569 crore in the same period last year.

This growth was led by a marginal uptick in discretionary spending during the long festive season. In its earnings release, the company said that festive season sales were lower than expected in the non-FMCG segment, and within FMCG, agri-staples (ex-edible oil) are witnessing high inflation.

Also Read: India's retail inflation hit 4-month high of 5.69% in December In the general merchandise and apparel (GM&A) segment, the contribution has stabilised and trends have been encouraging post Diwali. However, analysts express concerns about strong competition from organised players such as Reliance, Star-Bazaar, and Zudio affecting GM&A.

Analysts suggest that inflationary pressure and a longer gestation period for large stores impacted DMart’s Q3 performance. Land restrictions and elevated real estate prices further curtailed store expansion, with DMart adding only 5 stores during Q3, bringing the total store count to 341.

In Q3 FY24, EBITDA came in at ₹1,120 crore, compared to ₹965 crore in the corresponding quarter of the previous year, falling short of analyst estimates due to a substantial surge in other expenses. Also Read: IIP growth at 8-month low in November: What do the numbers say about Indian economy? The company's consolidated profit after tax jumped 17% YoY to ₹690 crore