Shares of Avenue Supermarts Ltd., the parent company of the retail giant D-Mart, fell by nearly 6% to ₹3,474 on January 13 following the announcement of its Q3 results. The company reported a consolidated net profit of ₹723.54 crore for the quarter ending December 2024, marking a 4.8% increase compared to ₹690.41 crore a year earlier.
Revenue from operations surged by 17.68% to ₹15,972.55 crore, compared to ₹13,572.47 crore in the same quarter last fiscal. However, profit after tax (PAT) margins declined to 4.5% from 5.1% year-over-year.
Challenges impacting margins
Despite strong revenue growth, narrowing margins have raised concerns among analysts. Increased discounting in the FMCG category and rising operational expenses from store expansions have significantly impacted profitability. The company's total expenses rose by 18.52% to ₹15,001.64 crore.
Avenue Supermarts’ focus on maintaining competitive pricing and scaling operations has placed pressure on margins, which is a crucial consideration for investors looking to buy shares online.
Same-store growth and digital expansion
Same-store revenue growth for outlets operational for two years or more stood at 8.3% in Q3 FY25. Additionally, the company’s e-commerce platform, DMart Ready, saw a 21.5% growth in the first nine months of FY25. As consumer preference for home delivery continues to rise, Avenue Supermarts has aligned its business model to meet this demand, reflecting its adaptability in a competitive retail market.
Management reshuffle raises questions
Adding to investor concerns is a significant management transition. CEO and MD Neville Noronha announced he will step down in January 2026, with Anshul Asawa succeeding him in February 2026. Analysts have noted this transition as a key development with potential implications for the company’s long-term growth trajectory.
Analyst reactions to Q3 performance
Following the Q3 results, several brokerage firms adjusted their price targets for Avenue Supermarts’ shares. While some expressed optimism about the company’s revenue growth, concerns about narrowing margins and the ongoing discounting impact in metro towns were cited as reasons for caution. These insights are critical for those planning to buy shares online, highlighting the importance of a balanced investment approach.
Final thoughts for investors
As of January 13, 12:08 PM, the stock is trading at ₹3,586, showing a daily drop of 2.72%. The 52-week range stands between ₹5,485 and ₹3,317, indicating significant volatility. With a market capitalisation of ₹2,35,133 crore and a price-to-earnings (P/E) ratio of 86.5, these metrics serve as critical data points for potential investors considering options to buy shares online.
Avenue Supermarts’ Q3 results underscore its strong revenue performance but also highlight challenges in maintaining profitability amidst rising costs and competitive pressures. The management reshuffle further adds to uncertainties, making it essential for investors to assess both short-term risks and long-term growth prospects.
For those looking to buy shares online, thorough research and a clear understanding of the company’s fundamentals are crucial.
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