Diwali and Christmas may have saved DMart’s quarter

• DMart’s revenue crossed the ₹9,000 crore mark in the October to December quarter of FY2022.
• The normalcy around this festive season was an added bonus which boosted customer’s confidence in shopping online.
• DMart’s EBITDA margins are going to be in the 8-8.5% range in the December quarter.

Revenue of Avenue Supermarts — which runs retail store chain DMart — crossed a whopping ₹ 9,000 crore in the October to December quarter as more customers increased their budget for Diwali and Christmas shopping. This was the company’s highest quarterly revenue in the last two years.

The normalcy around this festive season was an added bonus, which further boosted customer’s confidence in shopping offline. This is exactly where DMart and its extensive network of 263 retail outlets end up benefit from, analysts and stock brokers believe.

But the sales figure is not the only thing that is going to be great for this retail store chain in the December quarter, say analysts. The revenue figure was only a sneak peak into DMart’s third quarter financial statement that is bound to be released this Saturday, on January 8. And it is definitely something that investors should keep an eye out for.


According to Neha Khanna, cofounder and director of financial services group Valpro, the company’s gross margin is likely to improve year-on-year due to relatively higher general merchandise sales and rising fast moving consumer goods (FMCG) product prices.

DMart’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins are going to be in the 8-8.5% range in the December quarter, she added.

There is nothing about DMart’s Q3 results that retail investors need to be worried about, but the same is hard to say for the January to March quarter of 2022. Especially, as the threat of a third COVID-19 wave hitting India lingers on.


It’s time DMart starts thinking of ecommerce

DMart has always focused extensively on its retail chain business, but it now needs to go for a digital spin. The competition coming from digital only players like JioMart and BigBasket had been increasing rapidly since the last two years.

But now Khanna believes that DMart and other groceries players — whether online or offline — are going to face tough challenges from players in the quick commerce domain.

Whether it’s Swiggy’s InstaMart, Zomato-backed Blinkit (formerly Grofers) or soonicorns (startups that are close to a billion dollar valuation) Zepto and Dunzo, all are priming 10 minutes delivery. While there are debates whether customers need these services, the fact of the matter remains that investment in the ecommerce space is getting heavier.

DMart added 59 stores in 2022.
Source: DMart’s regulatory filings

“Dmart is dependent on physical stores for the majority of its operation, there are several competitors in this field, only if DMart improves its existing ecommerce platform to attract customers we can expect something to be different [in January to March quarter],” Manoj Dalmia, founder and director at Proficient Equities, told Business Insider.

Even though DMart’s revenue hit a new record between July and September and the profit grew well above its pre-pandemic level, its stock took a 7% dip in trade after the second quarter earnings report came out.

The street’s concern was the lack of strength shown by India’s largest retail chain (by market value) in the online space. Stock broking firm JM Financial had then highlighted that DMart Ready’s ⁠— the ecommerce front of Avenue Supermarts ⁠— revenue declined 8% in the same time frame, even though the company expanded its ecommerce operations to Surat and Vadodara.

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