The retailer’s management adopted a cautious tone, saying that stores operational for more than two years recorded like-for-like (LFL) sales growth of 5.5%, compared with 7.1% in the year-ago period. Growth at older stores in large metropolitan cities remained flat during the quarter, while non-metro locations continued to perform better.
During the quarter, DMart added three new stores, taking its total network to 503 outlets.
The company also continued to rationalise its online grocery business. DMart Ready exited operations in seven cities and now operates in 11 large cities, reflecting a sharper focus on markets with stronger demand.
The revenue mix also saw a slight shift towards higher-margin categories. The contribution of General Merchandise & Apparel (GM&A) increased to 25.5% from 24.7% a year earlier, while the share of Foods and FMCG declined to 74.5% from 75.3%.
Separately, the company’s board approved the issuance of ₹1,000 crore worth of debentures through a private placement.
What brokerages said
Goldman Sachs maintained its ‘Sell’ rating with a target price of ₹4,000. The brokerage said revenue growth slowed despite store additions made towards the end of the previous quarter and higher food inflation.
It believes flat sales growth in metro stores points to rising competition from quick commerce platforms. Goldman also expects EBITDA margins to remain largely unchanged as higher operating expenses offset gross margin expansion.
JPMorgan retained its ‘Neutral’ rating while lowering its target price to ₹4,250. Although the brokerage said that gross margins improved due to a richer product mix, it flagged the 5.5% like-for-like growth as the biggest disappointment.
Weak demand in mature metro stores suggests that the impact of quick commerce is greater than previously anticipated, it said. The brokerage expects the stock to remain under pressure given slowing store-level growth.
Citi reiterated its ‘Sell’ rating with a target price of ₹3,400. The brokerage said same-store sales growth slowed sharply, resulting in revenue and earnings that missed its estimates. It attributed the slowdown primarily to quick commerce competition, along with the reversal of pantry stocking seen in the previous quarter.
Citi also pointed to the scaling back of DMart Ready operations, weaker subsidiary growth, and higher losses from the online business. It has cut its FY27-FY29 revenue estimates by 4-6% and earnings forecasts by 5-7%.
Jefferies maintained a ‘Hold’ rating and a target price of ₹4,500. While it believes the quarter was better than the headline numbers suggest because demand had been pulled forward into the previous quarter, management’s comments on flat growth in mature metro stores remain a concern.
The brokerage also said that a sharp increase in employee costs limited margin expansion despite stronger gross margins.
Motilal Oswal remained the most optimistic among the brokerages, reiterating its ‘Buy’ rating with a target price of ₹4,800. It said profitability was broadly in line with expectations as higher gross margins offset rising employee costs.
The brokerage believes store expansion remains the company’s key long-term growth driver, while the continued rationalisation of DMart Ready should improve operational efficiency.
