DMart Q2 Preview: PAT may fall 3% YoY despite double-digit sales growth
Avenue Supermarts is likely to see its net profit for the quarter ended September 2023 decline on a year-on-year (YoY) basis. This is largely because of a weak operational performance.
According to the provisional numbers released by the owner of DMart hypermarket chain earlier this month, the company’s standalone revenue increased by nearly 19% YoY in the September quarter to Rs 12,308 crore.
However, the net profit is expected to decline about 3% on year to Rs 666 crore, according to the average of estimates given by five brokerages.
The Radhakishan Damani-owned company will release its earnings on Saturday.
Dalal Street investors will track the management’s commentary on the outlook for the current quarter, given that festival season will drive discretionary spending and increase footfalls in stores.
Industry-wide commentary indicated a persistent slowdown in the discretionary category in the September quarter, but analysts expect it to improve in the current quarter with the onset of festive demand.
The company’s overall view on the margin trajectory for the rest of the financial year will also be watched by investors.
Store addition outlook and trend on revenue per square feet will also be a key monitorable.
Revenue per sq ft, which remained subdued in the recent past mainly due to the addition of larger store sizes and weak discretionary spending, is now seeing a pick-up, said analysts at Motilal Oswal Securities.
“We believe the improvement in revenue per sqft indicates an improved contribution from larger stores,” it said.
As of September 30, the company's total number of stores stood at 336, with nine new additions in the last quarter.
