Avenue Supermarts Q3 Preview: Brokers estimate that even though the festival season fell into Q3FY24 rather than Q2, discretionary consumption remained poor from October to December.
Avenue Supermarts is expected to see reduced revenue growth in the third quarter of its fiscal year due to a decline in input prices and weak festive demand. Based on the average of expectations from four brokerage firms, the operator of DMart stores is expected to report a standalone net profit of Rs 740.6 crore for Q3FY24, up 15.5 percent year over year. Avenue Supermarts is predicted to post a 17 percent YoY rise in standalone revenues in Q3FY24 at Rs 13,247 crore, slower than the 18.5 percent YoY growth in Q2FY24. Avenue Supermarts will release its October-December results on January 13.
In the third quarter, DMart’s EBITDA margin is probably going to stay steady at 8.3–8.5 percent. EBITDA (earnings before interest, tax, depreciation, and amortization) margins are expected to rise as a result of improved operating leverage, according to Axis Securities. Brokers estimate that even though the festival season fell into Q3FY24 rather than Q2, discretionary consumption remained poor from October to December. – Avenue Supermarts Q3 Preview
According to a research by Motilal Oswal, “the industry-wide commentary has indicated a persistent slowdown in the discretionary category in 3QFY24, which may be still hurting the non-food category, even though the shift in the festive season was expected to benefit discretionary companies.” For Dmart, non-food categories account for 25–30% of overall sales.
In addition to experiencing lackluster demand, the brokerage firm stated that DMart’s larger locations have suffered a slower-than-expected scale-up in sales and that the store’s discretionary area is not drawing productivity as it should.
