DMart Q3 earnings: Profit jumps 24% YoY, margins improve

Dmart results: Dmart, one of the largest retail chains in India, announced its Q3 numbers on Saturday afternoon. D-Mart is a national supermarket chain that offers customers a range of home and personal products under one roof.

Net profit higher: DMart’s net profit jumped 23.7% YoY to Rs 553 crore in the Oct-Dec period, below street estimates. Analysts had earlier anticipated a net profit of about Rs 636.70 crore. Last year in the December quarter, the net profit reported was Rs 447 crore. The net profit in the second quarter was Rs 410 crore.

Revenue rises: DMart’s revenue rose by 18.3% on-quarter to Rs 9,218 crore. Last quarter the revenue was Rs 7789 crore. The revenues are higher by 22.2% on-year, it was Rs 7,542 crore in the year-ago quarter.

DMart Q3 earnings

Operating profit and margins improve: It reported an EBITDA of Rs 868 crore, a growth of 25.6% YoY. PAT margin for the December quarter improved to 6%, up 10 basis points over 5.9% in the same quarter last year. The overall gross margins were marginally lower due to mix deterioration. General merchandise and apparel business is consistently seeing relatively lesser sales contribution while essentials and FMCG are doing better.

Earning Per Share: Basic Earnings per share (EPS) for Q3FY22 stood at Rs.9.04, as compared with Rs.7.26 for Q3FY21. 

Store count: The store count reported by the company as of 31 December 2021 is 263. It added 17 new stores in the Oct-Dec period.

Dmart Q3 results FY22: Review

Avenue Supermarts has reported a strong set of numbers for the Oct-Dec 21 period, in a near normal quarter, after restrictions in the previous quarters impacted earnings. The margins also saw a healthy growth during the quarter.

D-Mart has added 17 new stores net during Q3 which is the highest in seven quarters. The company had indicated that it will add 59 stores over FY20-22. Considering the current Covid wave, the company's sales and footfalls will be dependent on local regulations. The company said in a statement that they are seeing higher inflation as an opportunity to make buying more efficient, assortment sharper, and continue to keep their costs low. They will continue to take all precautions to ensure every shopper, employee, and partner is operating in a safe environment. 

While the business growth had been good, many analysts have flagged the high valuations of the shares. Last week, following the release of the Business Update, Morgan Stanley has retained an ‘Underweight’ call on the shares with a target price of Rs 4,338. The stock had closed at Rs 4,744.95 on NSE on Friday.