DMart shares rally over 7%. What’s fueling the surge?

Shares of Avenue Supermarts jumped over 7% on Wednesday to hit the day’s high of Rs 4,299 on the NSE after the company said that it will step up store additions going forward to counter the quick commerce (QC) threat. The DMart operator also rejected suggestions that the competition from quick commerce will affect its financial performance.

In an analyst meeting held on Tuesday, the company announced its plans to add more stores, according to media reports.

On Tuesday, the company also informed the exchanges about opening a new store at Pathankot in Punjab. This takes the total number of stores to 426. The company, owned by Radhakishan Damani, had informed the exchanges about the development on Tuesday after market hours.

Avenue Supermarts reported a standalone net profit of Rs 830 crore in the first quarter of FY26. This was up just 2% from Rs 812 crore posted in the year-ago period. Revenue from operations in the same period increased 16% year-on-year (YoY) to Rs 15,932 crore.

In Q1, the company opened nine new stores, bringing the total store count to 424 as of the end of June.

The company had then said that while overall revenue growth was strong, there were certain pressures that affected margins and costs.One of the key reasons for a flat profit was high deflation in the prices of several staple food items and non-food products. This price decline had impacted sales growth by about 100 to 150 basis points. Additionally, the FMCG market remained highly competitive, which also put pressure on margins.The D-Mart operator reported a standalone EBITDA of Rs 1,313 crore, compared to Rs 1,221 crore in the same quarter last year. The EBITDA margin stood at 8.2%, down from 8.9% in the year-ago period.

On a consolidated basis, the EBITDA stood at Rs 1,299 crore, with an EBITDA margin of 7.9%, also lower than the 8.7% posted in Q1FY25.

The company’s CEO and MD, Neville Noronha, said that older stores (two years and above) recorded a 7.1% growth in the quarter.

The company also saw an increase in operating costs, attributed to improved service levels, capacity building, and inflation in entry-level wages. The gross margin was lower compared to the previous year due to continued competitive pressure in the FMCG segment.

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