Avenue Supermarts Shares Plunge Over 9% as Q2 Results Disappoint Investors

Avenue Supermarts shares dropped more than 9% on Monday after the DMart operator’s Q2 results fell short of analysts’ expectations. The stock fell by as much as 9.37%, hitting ₹4,143.60 on the BSE.

The company, owned by investor Radhakishan Damani, reported slower revenue and profit growth for the September quarter, along with rising costs. Avenue Supermarts posted a consolidated net profit of ₹659.58 crore for Q2 FY25, marking a modest increase of 5.77% from ₹623.56 crore in the same period last year.

Revenue for Q2 FY25 grew by 14.4% to ₹14,444.5 crore, compared to ₹12,624.4 crore a year earlier. However, the EBITDA for this quarter was ₹1,094 crore, up from ₹1,005 crore in Q2 last year, while the EBITDA margin decreased to 7.6% from 8.0%.

The like-for-like revenue growth for stores older than two years was just 5.5%.

Following these disappointing results, several brokerages downgraded their ratings and target prices for DMart. JPMorgan noted that the results were below expectations and reduced its FY25 and FY26 EBITDA estimates by 8% and 10%. They downgraded the stock to “Neutral” and lowered the target price from ₹5,400 to ₹4,700.

Bernstein highlighted that DMart’s Q2 revenue growth was the slowest in four years, with like-for-like growth at its weakest in three years. Nuvama Institutional Equities also cut their FY25 revenue, EBITDA, and profit estimates by 3%, 4%, and 7%, respectively, and maintained a “Hold” rating with a revised target price of ₹5,040, down from ₹5,183.

Antique Stock Broking mentioned that DMart faced increasing competition from online grocery services, particularly in metro areas. Although there was a slight recovery in general merchandise and apparel, the rising operational costs led to a contraction in EBITDA margin.

As of 10:00 am, Avenue Supermarts shares were trading 7.18% lower at ₹4,244.00 on the BSE.