DMart’s Q1 results to test investor optimism in CEO succession plan
The company, which has been running the Dmart retail chain, has long announced that General Manager Neville Noronha will resign until January 2026. Anshul Asawa was called the next CEO.
Since the announcement between January 11, 2025 – July 9, the company’s shares increased by about 25% and performed better than BSE Sensex, which won 12% in the same period. This shows that investors have supported the company’s trouble -free leadership plan so far.
However, this optimism can be tested when preparing to report the financial results of Avenue Supermarts for April -June.
According to the 2 July Analyst report by Motilal Oswal Financial Services, written by Vishal Punmiya and Jay Mehta, the company is expected to declare about an income. La26 16,378 Crore for the first quarter of the financial year. This will increase by 16.4% compared to the same period last year. Operating profit is expected to increase by 11.4% La1,360 crore is likely to grow 6% of net profit La820 Crore.
However, the company’s profit margin is expected to drop from 8.7% to 8.3% compared to the previous year. This decrease is attributed to weaker demand for non -compulsory substances such as household items and clothes.
These products often give higher margins than grocery staples that tend to be more sensitive. Customers often compare prices in daily use products such as rice, oil and milk, leading to more strict competition and lower markings. In contrast, optional products such as clothing, kitchen utensils and cleaning products are purchased less and allow retailers to receive higher margins.
Avenue Supermarts is scheduled to announce its earnings on July 11 for the June quarter.
Five important things to consider in the quarter results of DMART:
The demand for general goods remains weak
While the demand for food and grocery products remains stable, general products and clothing sales are typically softened by higher margin categories. According to the Motilal Oswal report, this may be due to unusual hot summer air and low urban consumer expenditures.
As a result, the company’s ability to earn more than any sale may have been affected. The gross margin is expected to remain flat by 14.9%.
Growth is largely new store additions
The company added nine new stores for a quarter and brought the total number of stores to 424. However, the increase in income seems to be directed by these new openings rather than increasing sales in existing stores.
According to Motilal Oswal, the company added the total number of stores to 424 and added nine new stores in April -June. According to the report, this is compatible with the last quarters.
On the other hand, their peers are expanding faster: V-Mart added 13 stores to Q1FY26, while Trent added only one store in this quarter-opened 130 stores in the pre-quarter, largely through Zudio and Westside.
The same store sales growth continues to slow down
The same store sales growth (SSSG), which follows the performance in open stores for at least one year, is expected to remain in the middle-at high single-digit range for the June quarter. This has been pursuing a consistent decrease in last year: SSS, 8.4% in FY25, 7.9% in Q2, 6.5% in Q3 and 2.6% in the 4th quarter.
There is no visibility in Dmart Ready’s strategy
Dmart Ready, the company’s online grocery platform, is currently operating in 25 cities. However, there was no significant update about expansion, pricing or strategy. Meanwhile, competitors such as Zepto, Blinkit and Swiggy Instamart continue to expand online delivery networks. The Analyst report said that any comment from the company will closely monitor the digital affairs.
Limited communication from management
Unlike other retail peers listed as Trent, V-Mart and Aditya Birla Fashion and Retail, Avenue Supermarts does not make three months of earning calls or do not provide detailed investor interpretation. This means that investors should only rely on the figures published in the results in order to evaluate their business performance and understand the priorities of the incoming CEO.
