Avenue Supermarts Limited FY2025 Results: Revenue Growth Amid Margin Pressures and Strategic Shifts

Avenue Supermarts Limited, operator of the DMart retail chain, reported its FY2025 financial results, showcasing robust top-line growth but highlighting challenges in maintaining profitability margins. The company’s revenue surged 16.7% year-on-year (YoY) to ₹57,790 crore, while net profit rose 8.6% to ₹2,927 crore. However, margin compression and strategic reinvestment priorities underscored a mixed picture for investors.

Revenue Momentum, Margin Headwinds

The fiscal year ended March 31, 2025, marked Avenue Supermarts’ strongest revenue growth in years. Quarter-on-quarter (QoQ), however, Q4 FY25 revenue dipped 7% to ₹14,462 crore, reflecting seasonal slowdowns. The company’s EBITDA margin fell to 7.9% from 8.3% in FY2024, driven by rising costs in labor, FMCG competition, and investments in operational efficiency.

Expansion and Challenges

• Store Growth: The company added 50 new stores in FY2025, bringing its total to 415 stores across 10 states and the National Capital Region. Non-metro markets delivered strong same-store sales growth (8.1% in Q4), outperforming metro areas.
• FMCG Pressure: Intensifying competition in fast-moving consumer goods (FMCG) reduced gross margins. Mature metro markets faced particularly tough pricing dynamics.
• Labor Costs: Wage increases for entry-level roles—driven by labor supply-demand imbalances—added to expense pressures.

E-Commerce: Growth vs. Profitability

The DMart Ready online segment saw strong home delivery growth, offsetting losses from closed pick-up points. However, management acknowledged that standalone profitability for the e-commerce arm remains distant. CEO Neville Noronha framed FY2025 as a “reset and review” phase, emphasizing the model’s scalability in metro cities but warning against near-term profits.

No Dividends, Reinvestment Focus

Avenue Supermarts maintained its dividend-free streak since 2018, with no payout announced for FY2025. The Board prioritized reinvesting profits into store expansion, technology upgrades, and service improvements. This aligns with its EDLC-EDLP strategy (Everyday Low Cost-Everyday Low Price), aiming to sustain affordability and customer loyalty.

Market Reaction and Outlook

Shares fell 3% post-announcement, reflecting investor disappointment over margin contraction and the lack of a dividend. However, the company’s resilience in non-metro markets and e-commerce progress suggest long-term potential. Key risks include:
1. Margin Sustainability: FMCG competition and wage trends could further squeeze profits.
2. E-Commerce Scaling: DMart Ready’s path to profitability remains unclear.
3. Consumer Sentiment: Economic slowdowns could impact discretionary spending.

Conclusion: A Story of Growth, But Not Without Growing Pains

Avenue Supermarts’ FY2025 results highlight its ability to grow revenue through store expansion and non-metro dominance. Yet, margin pressures and strategic reinvestment demands paint a cautionary picture. With a 16.7% revenue jump and 8.6% PAT growth, the company remains a retail powerhouse. However, investors must weigh its top-line momentum against the risks of margin erosion and delayed dividends.

The EDLC-EDLP strategy offers a clear roadmap, but execution will be critical. If the company can stabilize margins through operational efficiency and eventually monetize its e-commerce efforts, DMart could regain investor confidence. For now, the stock’s 52-week range (₹3,340–₹5,484) reflects market uncertainty—a reminder that growth alone isn’t enough in a competitive retail landscape.

Investors should monitor FY2026 updates for signs of margin recovery and dividend policy shifts, while the company’s focus on affordability and market penetration remains its strongest defensive shield.