DMart Q3 Results Preview: Revenue Growth Expected Amid Margin Pressure Concerns

Avenue Supermarts , the company behind the popular DMart retail chain, is scheduled to release its Q3FY26 earnings results on Saturday, January 10, 2025. The Radhakishan Damani-backed retailer has already provided a glimpse of its December quarter performance through a business update disclosed on January 2, 2025.

Q3FY26 Business Update Highlights

The company reported encouraging top-line growth in its latest business update. Key performance metrics for the quarter include:

Metric	Q3FY26	Q3FY25	Growth
Standalone Revenue	₹17,612.62 crore	₹15,565.23 crore	13.15% YoY
New Stores Added	10 stores	-	-
Total Store Count	442 stores	-	-

The revenue growth reflects sustained demand for essential retail and steady consumer spending across both food and non-food categories. During the quarter, DMart continued its expansion strategy by adding 10 new stores, though one store at Sanpada, Navi Mumbai, Maharashtra, remains temporarily closed for reconstruction.

Brokerage Expectations and Margin Concerns

Analysts anticipate a mixed performance for the December quarter, with revenue growth expected to be offset by margin pressures. According to Seema Srivastava, Senior Research Analyst at SMC Global Securities, the results are expected to be flat to positive, in line with the recent business update.

Motilal Oswal Financial Services projects the following consolidated performance:

Parameter	Expected Growth	Margin Impact
Revenue Growth	~13% YoY	-
PAT Growth	~5% YoY	-
EBITDA Margin	7.30%	-35 bps YoY

Nuvama Wealth Management expects similar trends on a standalone basis, with revenue growth of 13.20% year-on-year and core PAT growth of 6% year-on-year. However, the brokerage anticipates EBITDA margin compression to 7.50% in Q3FY26 from 7.90% in Q3FY25.

Key Factors Impacting Performance

Several factors are expected to influence DMart's quarterly performance:

Cost Pressures: Elevated operating and input costs are likely to keep operating margins under pressure
Competitive Intensity: Growing competition, including the expanding quick commerce segment, is impacting pricing strategies
Gross Margin Stability: Nuvama expects a gross margin of 14%, assuming stable general merchandise and apparel mix
Revenue vs Profit Growth: Recent quarters have shown revenue growth outpacing net profit expansion, indicating margin compression

Previous Quarter Performance Context

For Q2FY26, Avenue Supermarts reported net profits of ₹684.80 crore, representing a 3.90% increase, while revenue from operations grew 15.40% to ₹16,676.30 crore. This performance pattern of strong revenue growth coupled with modest profit expansion is expected to continue in Q3FY26.

Market Performance and Outlook

DMart shares closed 0.43% higher at ₹3,805.10 on the BSE on Friday, January 9, 2025. On a weekly basis, the stock gained over 2% for the week ended January 9, breaking a seven-week losing streak.

Analysts will closely monitor management commentary on store addition momentum, cost control measures, supply-chain efficiencies, and expansion plans for tier-II and tier-III cities. These factors will be critical in assessing the sustainability of growth and potential margin recovery over the medium to long term.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+0.30%	+2.29%	-1.71%	-9.77%	-1.09%	+28.10%

Avenue Supermarts has received a revised price target of ₹6,105 from CLSA, down from the previous target of ₹6,300, yet still indicating substantial upside potential of 63% from Friday's closing price of ₹3,745.10. The revision comes ahead of the company's third-quarter financial results scheduled for Saturday, January 10.

Analyst Maintains Bullish Outlook

CLSA analyst Aditya Soman has maintained a 'High-Conviction Outperform' rating for the retail chain, emphasizing the strength of DMart's fundamental business model. According to Soman, the company's low-cost operator model remains robust, and concerns regarding competition from quick commerce platforms are overdone.

The analyst highlighted DMart's strategic advantages in the competitive retail landscape:

Key Strength	Impact
Low-cost operations	Enables competitive pricing to consumers
High sales velocity	Achieves better operational scale
Private label expansion	Drives next level of market share gains
Small town expansion	Rapidly scaling business model

Q3 Business Performance

DMart's Q3 business update revealed solid operational metrics for the quarter ended December 31, 2025:

Metric	Q3 FY26 Performance
Standalone Revenue	₹17,613 crore
YoY Growth	13%
Total Store Count	442 stores

Strategic Positioning and Market Dynamics

Soman emphasized that DMart's competitive moat continues to strengthen through its virtuous business cycle. The company's ability to operate with low costs allows it to offer competitive prices, leading to high sales velocity and better scale, which further reduces costs and enables market share gains in India's price-sensitive retail market.

The analyst noted that DMart is rapidly scaling its private-label assortment, which is expected to drive the next level of share gains. Additionally, the DMart model is being aggressively expanded to smaller towns, broadening its market reach and customer base.

Earnings Forecast Adjustment

CLSA has trimmed its FY26-28 earnings per share forecast by 1-3% to reflect slower sales growth expectations, which warranted the reduction in the target price. Despite this adjustment, the analyst maintains confidence in the company's long-term prospects and competitive positioning.

Stock Performance Context

DMart's share price has remained relatively flat on a 12-month basis and is trading nearly 24% lower from its 52-week high of ₹4,949.50 achieved in September. While the analyst expects the stock price to remain under pressure given slower sales growth in the near term, the core investment thesis remains intact based on the company's status as the lowest-cost operator in the segment.