DMart posted solid profit growth in its October‑December quarter, but slower sales at existing stores have analysts urging caution.
Q3 Results Overview
For the quarter ending December, DMart’s net profit rose 17% year‑on‑year to ₹856 crore. Revenue grew 13.3% to ₹18,101 crore, and EBITDA increased 20.2% to ₹1,463 crore. The company’s overall margin improved to 8.1% from 7.7% a year earlier.
Despite these gains, same‑store (LFL) sales growth fell to 5.6%, well below the pace seen in most prior quarters.
Analyst Views
- Citi – Sell: Citi cut its target price to ₹3,150, saying the slowdown in LFL growth and weaker revenue outlook pose risks. It warns that the margin boost may be a one‑off, linked to temporary discounting changes.
- Jefferies – Hold: Jefferies kept a Hold rating with a ₹4,050 target, noting the earnings surprise was margin‑driven but flagging modest revenue growth and upcoming CEO transition as execution risks.
- Nuvama – Hold: Nuvama also stayed on Hold, setting a ₹4,351 target. It highlighted that profit growth came mainly from lower discounting and cautioned that future growth may be slower.
What It Means for Investors
While DMart’s profit and margin expansion look attractive, the dip in same‑store sales suggests the growth engine may be weakening. Investors should weigh the short‑term earnings beat against the longer‑term risk of slower expansion and competitive pressure from quick‑commerce players.
In short, the stock may offer limited upside unless DMart can revive its LFL growth and sustain margin improvements.
Remember, this is perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.