Avenue Super. Q4 FY26 Earnings Call — Analysis (NSE: DMART)
New CEO Anshul Asawa outlines technology and expansion push as DMart grapples with metro SSSG slowdown and quick commerce competition; store addition targeted at 15% of base while DMart Ready narrows focus to 11 cities for profitability.
The take
FY26 Revenue ₹67,000 Cr ( +16% YoY ) . New guidance — FY27 store addition rate 15% . New story: Cluster-based store expansion with lease flexib… .
Results
Revenue ~₹67,000 Cr +16% YoY; EBITDA margin 7.85% flat YoY; PAT ₹3,224 Cr +10% YoY; SSSG 8.1% for FY26.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue | ₹67,000 Cr | +16% | yoy · FY26 |
| EBITDA margin | 7.85% | yoy · FY26 | |
| Profit after tax (PAT) | ₹3,224 Cr | +10% | yoy · FY26 |
| Cash from operations | ₹4,168 Cr | none · FY26 | |
| Like-for-like SSSG | 8.1% | none · FY26 · stores >2 years old | |
| Inventory days | 33.2 | yoy · FY26 | |
| Days payables | 7.2 | yoy · FY26 | |
| Net borrowing (actual debt) | ₹965 Cr | point_in_time · FY26 · Mar-26 | |
| ROCE | 17.1% | yoy · FY26 | |
| Revenue per sq ft | ₹33,422 | yoy · FY26 |
Guidance
Store additions targeted at ~15% of base annually; SSSG expected to stay near FY26 levels (~8.1%); DMart Ready to prove sustainable, profitable e-commerce model in 11 cities before expanding.
What management committed to
- We aim to increase [DMart’s total store count] by about 15% of the store base annually. — 15%, FY27
- [DMart’s] same-store sales growth will remain around the current level (FY26 ~8.1%) and will not increase considerably. — around the current level, FY27
- [DMart Ready] will prove a sustainable, profitable e-commerce model in the 11 focused cities before expanding to other locations.
- [DMart Ready] losses will be reduced significantly and the business will be driven more profitably.
- [DMart] will not enter the quick-delivery format; [DMart Ready] will stick to slotted 6-hour delivery.
- [DMart] gross margin will remain within the 14-15% band. — 14-15%, ongoing
- [DMart] will target a net margin of around 5% as the North Star, without compromising customer proposition. — around 5%, future
Key themes
Store expansion and quick commerce headwinds
How the narrative shifted
- Metro SSSG saturation and quick commerce competition: Management frames mature metro stores as hitting throughput limits while quick commerce adds pressure, constraining same-store growth to current levels; offsets with new store openings.
- Cluster-based store expansion with lease flexibility: Expansion will follow cluster approach in new states and existing markets, with 15% annual target; leasing adopted where land acquisition is difficult.
- DMart Ready consolidation for profitable unit economics: E-commerce narrows to 11 cities to prove a sustainable, profitable 6-hour delivery model before further expansion; management rejects quick delivery as incompatible with value positioning.
- Technology and organisational capability build: CEO announces upgrades to ERP, data stack and recruitment of senior talent to support larger footprint; cost impact expected to be marginal.
- Margin stability and value commitment: Management reiterates 14-15% gross margin and ~5% net margin as a steady-state North Star; any productivity gains will be passed to customers, preserving everyday low price moat.
- FMCG partnerships remain strong despite channel shift: FMCG vendors are deepening engagement with DMart, which is often the No.1 retailer for them; D2C and quick-commerce successes are brought into DMart stores once scaled.
Operational commentary
- Total stores crossed 500, with 85 new stores opened in FY26 (15 on lease).
- Entered 5 new states; will build store density in these new markets.
- DMart Ready narrowed focus to 11 cities to prove a profitable, sustainable model; reasserted slotted delivery under 6 hours.
- SSSG of 8.1% driven by metro saturation and quick commerce competition; metro SSSG slowing while Tier 1/2 towns performing better.
- Gross margin improved 16 bps; employee cost up 27 bps due to capability build and wage code; net margin slightly lower.
- Tech stack and data systems being upgraded; fresh foods pilot in select Mumbai stores.
- Anshul Asawa formally steps into MD & CEO role, reiterates 20-20-20 private label strategy and cluster-based expansion.
Analyst Q&A
Q. Will quick commerce impact DMart’s FMCG vendor partnerships or shelf-space allocation?
Vendor focus on DMart has increased; we are the No.1 retailer for many FMCG companies. Shelf space is driven by customer choice, not private-label push.
Q. Why is DMart Ready not offering a quick delivery format given quick commerce growth?
We are not looking at that option. We believe the 6-hour slotted delivery model for large baskets can be profitable, and we are focused on proving that.
Q. Whether store addition could be much higher, like 100–150 stores/year.
Internally we aim for 15% of the base; real estate and build timelines make faster ramp-up difficult. We are open to leasing to accelerate where needed, but capital and people are not constraints.
Q. What is the same-PIN-code sales growth for DMart Ready in the 11 cities?
We do not disclose those metrics.
Q. Could you provide the land value split between operational stores and upcoming land bank?
We do not disclose that breakdown.
Q. Impact of quick commerce on DMart’s same-store sales and whether competition could push SSSG below 5% in the medium term.
Metro stores are saturated and face competition; Tier 1/2 towns are doing well. We believe the overall opportunity remains large and we will remain the best value retailer.
Research and educational content only. Not investment advice.