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Avenue Supermarts, which owns and operates D-Mart stores, fared well on growth and margin in the March quarter (Q4FY26). Standalone revenue increased 19% year-on-year to ₹17,204 crore, and Ebitda margin expanded for the second straight quarter, rising by 37 basis points in Q4 to 7.16%. D-Mart stores that are two years old or older grew 10.8% in Q4FY26 versus 8.1% in Q4FY25.
But it’s on a rough road now. Q4FY26 benefitted from a spike in consumer buying following geopolitical tensions in March, but it normalized towards the end of the month. With this benefit fading, revenue growth may be relatively slower ahead, hurting operating leverage and making it tough to sustain the improving margin trend.
Intense competition from quick commerce firms in bigger cities is detrimental to Avenue’s profitability. Moreover, “Aggressive store additions done shall increase the proportion of immature stores with lower productivity, creating near-term margin pressure,” said a Systematix Shares and Stocks (India) report.
Avenue opened 58 stores in Q4FY26, taking the total count to 500. FY26 store additions stood at 85, far higher than in FY23, FY24, and FY25, when the figures were 40, 41, and 50, respectively.
But reported return on capital employed (RoCE) fell to 17.1% in FY26, from 17.8% in FY25. “The aggressive store expansion has bloated the balance sheet, stretching the inventory days,” said ICICI Securities’ analysts. Reported inventory days stretched to 33.2 days in FY26, up from 31.4 days in FY25. Avenue’s total debt jumped to ₹2,267 crore in FY26 versus 693 crore last year.
Meanwhile, the share of revenue from Avenue’s three main categories was broadly the same in FY26. The higher margin general merchandise & apparel (GM&A) category contributed 22.28% to FY26 revenue versus 22.26% in FY25. Foods and non-foods (FMCG) segments accounted for 57.90% and 19.82% of FY26 revenue, vis-à-vis 57.73% and 20.01% in FY25.
Margin may improve if Avenue can boost GM&A share. Q4FY26 gross margin rose by 30 bps year-on-year to 13.8%, aided by slightly higher GM&A share.
After dropping 5% on Monday following Q4 results, the stock is still up around 15% so far in 2026. The stock will take cues from near-term growth rates.
As per ICICI Securities, Q4FY26’s calculated sales per square feet declined 1% year-on-year to ₹35,433, suggesting that growth is largely reliant on aggressive store expansion rather than store-level productivity.
Pallavi Pengonda is a Senior Editor at Mint, where she leads the Mark to Market team. With over a decade of experience at the publication, she is the authority on breaking down complex financial reports and tracing how big economic shifts actually ripple through the business world. From deep-dives into the oil and gas sector to the latest trends in retail and tech, she covers giants like Reliance Industries and Hindustan Unilever with a sharp, analytical eye. <br><br>Her path to journalism was a bit of a pivot. After earning her Master’s degree in Finance from Mumbai’s Welingkar Institute, an internship at the DNA newspaper changed everything. An editor there gave her some classic advice: "You’ll learn a ton, even if the pay doesn’t match." She took the leap, spent three years at DNA, and never looked back. <br><br>When she isn’t decoding the stock market to help readers make smarter investment moves, Pallavi keeps things low-key. You’ll likely find her recharging over the weekend with a good book, heading out for a long walk, or spending time at her easel painting.
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