D-Mart Shares Plunges 10%

Avenue Supermarts, the parent company of D-Mart, saw it stock drop nearly 10% after the company fell short of expectations for its Q2 FY2025 earnings, and blamed quick commerce as a factor for slowing growth.

By the numbers:

• Quarterly sales grew 14.2% YoY to ₹14,444 crores, while net profit growth lagged at 5.8%, reaching ₹659 crores.
• Stock dropped to ₹4,192, erasing a significant portion of its year-to-date gains. Market cap now stands at ₹272,807 crores.

Why it matters: as one of India's largest and most efficient retailers, D-mart's struggles could offer a read through into challenges of the broader retail industry, particularly as disruptive digital habits continue to lure consumers away.

What are they saying: "We clearly see the impact of online grocery formats, including DMart Ready, in large metro DMart stores", said the CEO and MD of Avenue Supermarts, Neville Noronha.

There's more: Investors were also concerned about the slower store addition rate compared to previous quarters.

• With 366 stores across 22 cities and one union territory, D-Mart's expansion pace seems to have slowed
• Competition from both offline players like Reliance Retail and online giants such as Amazon and Flipkart

Zoom out: With a generational bull market unfolding in Indian stocks, the best-case scenario seems already priced in, leaving little room for error. D-Mart, for instance, is trading at a high P/E ratio of 102.

Bottomline: Retail spending in India is expected to amount to $1.7 trillion by 2026, up from $883 billion dollars in 2020. Growth market size is also attracting a breadth of competition.