Avenue Supermarts Ltd., the parent company of popular retail chain DMart, saw its share price drop nearly 6% on Monday following the release of its third-quarter results, which showed a slight rise in net profit but still falling short of analysts’ expectations.

For the quarter ending December, Avenue Supermarts reported a consolidated net profit of Rs 723.5 crore, marking a 4% year-on-year increase. However, this performance missed the consensus estimate of Rs 847 crore, as tracked by analysts on Bloomberg.

On a positive note, Avenue Supermarts saw a strong rise in revenue, which grew by 17.68% to Rs 15,972.5 crore, compared to Rs 13,572.8 crore in the same quarter last year. The company’s earnings before interest, taxes, depreciation, and amortisation also grew by 8.66%, reaching Rs 1,217.19 crore from Rs 1,120.18 crore in the previous year. However, the Ebitda margin experienced a decline of 63 basis points, falling to 7.62% from 8.25%, which further contributed to the market’s cautious reaction.

In addition to its financial results, the company revealed the appointment of Anshul Asawa as CEO designate and senior managerial personnel, effective March 15, 2025. Asawa is set to succeed Ignatius Navil Noronha, who has been the managing director since 2016. Noronha will complete his five-year term on January 31, 2026, after which Asawa will take over.

DMart is facing increasing pressure on margins due to heightened competition, including quick commerce, and rising discounting efforts to maintain footfall and protect bill sizes, according to a report from Nuvama Institutional Equities. The brokerage revised its profit estimates for fiscal 2025 and 2026 downwards by 11% and 17.4%, respectively, citing lower margins. Nuvama also noted that DMart Ready has ramped up its home delivery services. As a result, it lowered its target price to Rs 4,212, with a “hold” rating, reflecting a 13% upside from the previous close.

Motilal Oswal also highlighted the impact of rising competition on DMart’s growth and margins, revising its Ebitda and earnings projections for fiscal 2025-2027.

Citi Research attributed the margin contraction to a decline in general merchandise and apparel mix, increased discounting, and negative operating leverage, maintaining a “sell” rating with a target price of Rs 3,350, implying a 9% downside.

The scrip fell as much as 5.87% to Rs 3,469 apiece. It pared losses to trade 2.43% lower at Rs 3,596 apiece, as of 09:35 a.m. This compares to a 0.83% decline in the NSE Nifty 50 Index.

It has fallen 6.78% in the last 12 months. Total traded volume so far in the day stood at 8.5 times its 30-day average. The relative strength index was at 43.

Out of 30 analysts tracking the company, 12 maintain a ‘buy’ rating, eight recommend a ‘hold,’ and 10 suggest ‘sell,’ according to Bloomberg data. The average 12-month consensus price target implies a downside of 7.1%

. Read more on Markets by NDTV Profit.Avenue Supermart’s scrip fell as much as 5.87% to Rs. 3,469 apiece.  Read MoreMarkets, Business 

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