Avenue Supermarts (DMart) FY26: Scale expands to 500 stores as revenue reaches INR 66,968 crore

Avenue Supermarts Limited, operator of the DMart retail chain, ended FY26 with a clear headline: bigger scale, steady customer traffic, and a continued focus on value retailing. Revenue from operations rose to INR 66,968 crore in FY26 from INR 57,790 crore in FY25. EBITDA increased to INR 5,255 crore from INR 4,543 crore, while PAT moved up to INR 3,224 crore from INR 2,927 crore. The year was also defined by a sharp step-up in store additions, taking the chain to 500 stores at year-end, up from 415 a year earlier.

The operating picture, however, was not just about growth. DMart’s margins softened, with EBITDA margin easing to 7.8 percent from 7.9 percent and PAT margin falling to 4.8 percent from 5.1 percent. At the same time, productivity per square foot dipped slightly to INR 33,422 from INR 33,896, even as retail business area expanded meaningfully. The company appears to have traded a small amount of near-term efficiency for rapid network expansion and future capacity.

What DMart sells and why the mix matters

DMart’s revenue base remains anchored in Foods, which contributed 57.90 percent of revenue in FY26, up marginally from 57.73 percent in FY25. This category includes groceries, dairy, staples, snacks, frozen products, processed foods, beverages and confectionery, fruits and vegetables, and cooking oils. A foods-led mix typically supports frequent customer visits and stable volumes, which aligns with DMart’s model of daily discounts and everyday essentials.

Non-Foods FMCG contributed 19.82 percent of revenue in FY26 versus 20.01 percent in FY25. This bucket includes home care, personal care, toiletries, and other over-the-counter products. The slight decline suggests that foods continued to outperform in the mix, or that the company maintained sharper pricing in essentials during the year.

General Merchandise and Apparel stayed stable at 22.28 percent of revenue in FY26 compared with 22.26 percent in FY25. This category spans bed and bath, toys and games, crockery, plastic goods, garments, footwear, and home appliances. The stability here matters because this bucket can influence margins and basket size. In a year when margins softened, the steady contribution implies that the pressure likely came from the broader cost structure and the pace of expansion, rather than a dramatic mix shift.

Expansion at pace: cluster strategy scales up

DMart’s expansion playbook continues to be cluster-led, building density in select states and then widening reach. The store base grew from 415 in FY25 to 500 in FY26, with 85 store additions during the year. The company also noted that a Sanpada store at Navi Mumbai is currently closed for customers due to reconstruction but is included in the 500-store count.

The state-wise footprint shows how expansion has broadened over time. From 55 stores in 2011-12 concentrated largely in Maharashtra and Gujarat, DMart expanded to 214 stores by 2019-20 across multiple regions. By FY26, the network reached 500 stores across a long list of states, with meaningful scale in Maharashtra at 128 stores and Gujarat at 75 stores. Karnataka reached 50 stores. Tamil Nadu stood at 35, Andhra Pradesh at 47, and Telangana at 48. The company also reported presence in newer or smaller footprints such as Haryana, Goa, Odisha, Uttar Pradesh, and Uttarakhand.

This density-first approach matters in value retail. It can help reduce supply chain complexity, improve replenishment frequency, and support consistent pricing. It also supports brand familiarity within a cluster. But rapid network buildout can temporarily dilute per-store productivity because new stores take time to mature.

That dynamic shows up in the numbers. Retail business area expanded from 17.2 million square feet in FY25 to 20.6 million square feet in FY26. But revenue from sales per retail business area square foot moved down to INR 33,422 from INR 33,896. This is not a collapse in productivity, but it signals that the incremental space added in FY26 may not yet be operating at the same maturity curve as older stores.

DMart Ready: focus narrows to key large towns

The presentation also highlights how DMart Ready, the company’s offering referenced here, has been concentrated in major towns rather than broad-based coverage. The city list changed over time. In 2016-17, the footprint was shown as one city, Mumbai (MMR). By 2024-25, it expanded to 25 cities including Chandigarh, Amritsar, Jaipur, Gurugram, Ghaziabad, Indore, Bhopal, Sanand, Ahmedabad, Anand, Vadodara, Surat, Mumbai (MMR), Nashik, Pune, Kolhapur, Belagavi, Bangalore, Hyderabad, Vijayawada, Visakhapatnam, Nagpur, Raipur, Bhilai, and Chennai.

In 2025-26, the list is shown as 18 cities, including Jaipur, Indore, Bhopal, Sanand, Ahmedabad, Vadodara, Surat, Mumbai (MMR), Nashik, Pune, Kolhapur, Bangalore, Hyderabad, Vijayawada, Visakhapatnam, Nagpur, Raipur, and Chennai.

The reduction from 25 to 18 cities does not automatically imply contraction. It reads more like a deliberate focus on larger, high-potential markets where customer density and operational efficiency can be better managed. For a retailer built on sharp pricing and high throughput, selective focus can be a rational move if it improves fulfillment economics and service consistency.

Operating engine: transactions rise, same-store growth stays modest

DMart’s customer throughput continued to rise. Total bill cuts increased to 39.8 crore in FY26 from 35.3 crore in FY25. This suggests more transactions flowing through the network, consistent with store additions and ongoing customer adoption.

Like for like growth, defined as growth in revenue from sales of stores operational for at least 24 months at the end of the fiscal year, was 8.1 percent in FY26 versus 8.4 percent in FY25. This is a relatively stable figure, and it signals that growth continues to be supported by both mature-store momentum and new capacity addition.

The combination of stable like for like growth and slightly lower revenue per square foot suggests the company is in a transition year: strong space addition, steady customer traffic, but an inevitable lag before new stores reach mature productivity.

Working capital indicators remained steady. Days inventory in FY26 was 33.2 versus 31.4 in FY25. Days payables were stable at 7.2 in both FY25 and FY26. Inventory turnover ratio moved down to 12.8 in FY26 from 13.6 in FY25. These are not extreme shifts, but they align with a year of rapid expansion where inventory ramps up to support new stores and new selling space.

Profitability and capital: growth continues, leverage rises

The income statement shows steady top-line growth and expanding absolute profit, with some pressure on margins. EBITDA margin dipped slightly to 7.8 percent in FY26. PAT margin eased to 4.8 percent. This margin compression matters because DMart’s investment narrative often rests on disciplined execution, high volumes, and cost control. When margins soften, investors typically ask whether it is cyclical, expansion-driven, or structural.

The presentation does not provide a detailed cost bridge, but the balance sheet and operating metrics give clues. Total debt rose to INR 2,267 crore in FY26 from INR 693 crore in FY25. Debt to equity increased to 0.09 from 0.03. Even after the rise, leverage remains low in absolute terms for a business of this scale, but the direction is important. It suggests DMart is leaning more on borrowings and lease liabilities to fund the step-up in growth.

Equity rose to INR 25,520 crore in FY26 from INR 22,230 crore in FY25, supporting the balance sheet as the store base expands. Return on net worth declined to 13.5 percent from 14.1 percent. Return on capital employed decreased to 17.1 percent from 17.8 percent. These movements are modest, but they are consistent with a year of heavier capital deployment and a larger asset base that will take time to earn full returns.

Fixed asset turnover also declined to 3.2 in FY26 from 3.4 in FY25. This reinforces the same story: the company added capacity quickly, and the returns are likely to improve as the newer stores mature and ramp.

Cash generation remained positive. Net cash flow from operations increased to INR 4,168 crore in FY26 from INR 3,724 crore in FY25. For investors, this is a key counterweight to margin softness and higher debt. A retailer that continues to generate operating cash at scale has more flexibility to fund expansion and absorb short-term volatility.

Closing view: disciplined growth with a near-term margin trade-off

FY26 reads like a year where Avenue Supermarts pushed the accelerator on expansion. Store additions rose to 85, retail area crossed 20.6 million square feet, and transactions increased to 39.8 crore bill cuts. Revenue and profit both grew in absolute terms, and operating cash flow improved.

But the year also shows the cost of speed. Revenue per square foot dipped slightly, inventory days rose, and margins softened. Debt increased sharply from the prior year, even if leverage remains low relative to equity. Returns on net worth and capital employed edged down, reflecting the heavier asset base.

The core takeaway is that DMart’s model still appears intact: a foods-led mix, stable same-store growth, and a cluster-based rollout that deepens presence across key states. The next question for investors is whether FY26 proves to be a temporary digestion phase where new stores mature into productivity and margins stabilize, or whether the combination of scale and competitive intensity keeps profitability under pressure. For now, the company’s operating cash flow strength and consistent expansion strategy suggest management is prioritizing long-run network strength, even if it means accepting a small near-term margin trade-off.