Avenue Supermarts Q2 Results: Revenue Rises 15.5% to ₹16,676 Crore

Introduction to Q2 Performance

Avenue Supermarts Ltd, the operator of the popular retail chain DMart, announced its financial results for the second quarter of fiscal year 2026, which ended on September 30, 2025. The company reported a consolidated revenue from operations of ₹16,676.30 crore, marking a 15.45% increase from the ₹14,444.50 crore recorded in the same quarter of the previous fiscal year. This growth was primarily driven by the company's consistent store expansion strategy. However, the performance also highlighted persistent pressure on profitability, with margins narrowing compared to the previous year.

Detailed Financial Breakdown

While the top line showed robust growth, the company's net profit saw a modest increase. The consolidated net profit for Q2 FY26 stood at ₹684.85 crore, a 3.85% rise from ₹659.44 crore in the corresponding quarter last year. This slower profit growth was reflected in the company's margins. The Profit After Tax (PAT) margin contracted to 4.1% in Q2 FY26 from 4.6% in Q2 FY25. Total expenses for the quarter rose by 16% to ₹15,751.08 crore, outpacing revenue growth and contributing to the margin pressure.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 11% to ₹1,213.8 crore from ₹1,093.8 crore in the prior year. The EBITDA margin also saw a contraction, narrowing by 30 basis points to 7.3% from 7.6% in the same period last year. These figures were largely in line with analyst expectations, with brokerage firm Jefferies having projected an EBITDA of ₹1,216 crore.

Operational Highlights and Store Expansion

A key driver of DMart's revenue growth has been its physical store expansion. During the second quarter, the company added eight new stores, bringing its total store count to 432 as of September 30, 2025. This expansion increased its total retail business area to 17.9 million square feet, up from 15.8 million square feet a year earlier.

Anshul Asawa, CEO-Designate of Avenue Supermarts, commented on the performance, stating, “Our revenue in Q2 FY26 grew by 15.4% over the previous year. Two years and older DMart stores grew by 6.8% during Q2 FY26 as compared to Q2 FY25.” This like-for-like growth indicates a healthy performance from established stores, showing an acceleration from the 5.5% growth seen a year earlier. Asawa also noted that the company passed on the benefits of recent GST rate reductions to its customers.

Performance of E-commerce Arm: DMart Ready

The company's e-commerce subsidiary, Avenue E-Commerce Limited (AEL), which operates under the brand DMart Ready, continued its strategic realignment. Vikram Dasu, CEO of Avenue E-Commerce, explained the focus on strengthening its presence in major urban centers. “We added 10 new fulfilment centers in our existing markets and continued to invest and deepen our presence in the large metro cities,” he said. As part of this strategy, DMart Ready ceased operations in five smaller cities: Amritsar, Belagavi, Bhilai, Chandigarh, and Ghaziabad. Following these changes, the e-commerce service is now available in 19 Indian cities.

Key Financial Metrics Summary

Market Context and Valuation

Investors on Dalal Street were closely watching DMart's results for insights into consumer health, especially after the government's GST reforms aimed at reviving demand. The company's performance suggests a recovery in sales, but also highlights the challenges posed by a higher cost structure and intense competition from quick commerce platforms.

Despite moderating growth rates, retail stocks like Avenue Supermarts continue to trade at high valuations. The stock trades at a Price-to-Earnings (P/E) ratio of over 80 times its estimated FY26 earnings. On the day the results were analyzed, the stock ended 0.3% higher at ₹4,319.7, indicating a neutral market reaction. The high valuation suggests that significant future growth is already priced into the stock, leaving little room for disappointment.

Conclusion and Forward Outlook

Avenue Supermarts delivered a quarter of steady revenue growth fueled by its aggressive store expansion and improving performance in older stores. However, the pressure on profit margins remains a significant concern for investors. The company's ability to manage its cost structure while competing in a dynamic retail environment will be critical. Furthermore, the strategic consolidation of its e-commerce arm, DMart Ready, to focus on major metro cities will be a key area to watch in the coming quarters as it seeks a profitable path in the online grocery space.