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