Avenue Supermarts Limited has delivered impressive financial results for the quarter ended December 31, 2025, showcasing strong operational performance and sustained growth across key financial metrics. The retail giant, operating under the D Mart brand, reported substantial improvements in revenue and profitability compared to the corresponding period in the previous fiscal year.

Financial Performance Overview

The company's standalone financial results demonstrate robust growth momentum during Q3FY26. Total income reached ₹17,642.89 crores, marking a significant increase from ₹15,601.67 crores reported in Q3FY25. This growth trajectory reflects the company's continued expansion and operational efficiency improvements.

Profitability Metrics

The company's profitability indicators showed strong improvement during the quarter. Net profit before tax increased to ₹1,236.32 crores from ₹1,052.60 crores in the same quarter last year. Net profit after tax rose to ₹923.05 crores, compared to ₹784.65 crores in Q3FY25, representing substantial growth in bottom-line performance.

Earnings per share metrics also reflected this positive trend, with basic EPS reaching ₹14.19 compared to ₹12.06 in the corresponding quarter of the previous year. Diluted EPS stood at ₹14.16, up from ₹12.04 in Q3FY25.

Nine-Month Performance

For the nine-month period ended December 31, 2025, Avenue Supermarts maintained its strong performance trajectory. The company reported total income of ₹49,860.85 crores with net profit after tax of ₹2,499.33 crores for the nine-month period.

Consolidated Results

The consolidated financial results also demonstrated positive performance during Q3FY26. Consolidated total income reached ₹18,117.81 crores, while net profit after tax stood at ₹855.78 crores. The consolidated basic earnings per share was ₹13.15 for the quarter.

Corporate Governance

The financial results were reviewed and recommended by the Audit Committee before being approved by the Board of Directors at their meeting held on January 10, 2026. The limited review required under SEBI regulations has been completed by the company's auditors, ensuring compliance with regulatory requirements.

The company maintains its paid-up equity share capital at ₹650.73 crores with a face value of ₹10 per share. Other equity excluding revaluation reserves stood at ₹24,087.84 crores on a standalone basis, reflecting the company's strong balance sheet position.

Avenue Supermarts may be nearing a bottom after a sharp correction, with margin improvements in the October-December quarter of 2025 (Q3FY26) pushing the retailer into oversold territory, according to Abneesh Roy, Executive Director at Nuvama Institutional Equities. The encouraging quarterly performance has set up the possibility of a near-term rebound despite ongoing concerns around foreign investor selling.

Q3FY26 Performance Shows Stabilisation Signs

Roy described the Q3FY26 numbers as encouraging, highlighting a roughly 50 basis point improvement in both gross and earnings before interest, taxes, depreciation and amortisation (EBITDA) margins. After a prolonged period of pressure on profitability, even this modest margin uptick has come as a positive surprise for the market.

"It's a good number. I think this stock is in the oversold zone," Roy stated, pointing to the margin recovery as a key positive indicator.

Operational Indicators Point to Recovery

Beyond margins, Roy highlighted that operational indicators were also stabilising. Growth in DMart Ready was tracking close to 20%, which he described as reasonable performance. Store expansion remained on course with Avenue Supermarts adding around 28 stores in the first nine months of the year.

Roy expects the expansion pace to accelerate in the January-March quarter of 2026 (Q4FY26), potentially taking full-year additions to about 60 stores. He also noted a subtle but important shift in the company's expansion strategy, with greater openness to leasing rather than traditional store ownership, which could support faster expansion in newer markets such as Uttar Pradesh.

Sustainability Concerns and Valuation Challenges

While optimistic about near-term prospects, Roy cautioned that sustainability of margin improvement will be critical. Avenue Supermarts has seen its margins erode over the past few years, and while the last two quarters suggest a possible bottoming out, consistency will determine whether investor confidence returns.

"Sustainability is important," Roy emphasised, adding that the current quarter's improvement needs to be seen in context before drawing longer-term conclusions. He noted that while the stock remains expensive on valuation metrics, the recent correction has already priced in significant bad news, supporting a mild positive reaction in the near term.

Broader Retail Landscape and Stock Preferences

On the broader retail landscape, Roy cautioned against drawing direct parallels between different players, noting that retail remains highly competitive with each company operating under distinct business models. Factors such as GST transitions, discounting behaviour, and demand dynamics vary widely across retailers.

Regarding other retail stocks, Roy remains cautious on Trent, preferring to wait for clearer signs of improvement in growth and margins. However, he sees value emerging in ITC despite continued foreign institutional investor selling. Roy believes ITC's downside risks are limited, supported by:

• Attractive valuations
• Dividend yield of around 5%
• Expectations of price hikes that could aid margins
• Limited downside potential

Over a two-year horizon, Roy considers ITC a reasonable investment despite near-term sentiment challenges. For Avenue Supermarts, meaningful re-rating would require sustained sales growth of around 17-18% along with further margin recovery, as competitive intensity from e-commerce and quick-commerce players continues to rise.