🧠 1. At a Glance
DMart is India’s most beloved grocery unicorn that behaves like a monk. Run by value retailing god Radhakishan Damani, it has zero debt, sky-high P/E, and margins tighter than your apartment kitchen. But in FY25 and Q1FY26, even this minimalist giant saw slowing profit growth despite adding more stores. Investors are asking: Is DMart’s magic slipping, or just taking a breather?
🎬 2. Introduction with Hook
DMart is that friend who never splurges, never drinks, never travels… but always has ₹10 crores in the bank. The OG of value retailing, it was the investor’s darling — until it stopped being the market’s flex.
- Stock is down 17% in the past year
- P/E still over 97x, despite single-digit PAT growth
- And no dividend. Because savings, bro.
So now the question is: Are margins compressing permanently? Or is this just retail’s version of a nap?
🏭 3. WTF Do They Even Do? (Business Model)
Avenue Supermarts runs DMart, the most efficient retail chain in India. They sell:
- 🛒 Food & Grocery (high volume, low margin)
- 🧼 FMCG / Non-food staples
- 👕 General Merchandise & Apparel (higher margins, but not growing much)
They run on the EDLC–EDLP model:
Everyday Low Cost → Everyday Low Price
How do they do it?
✅ 95%+ stores owned, not rented
✅ No-frills stores = lower opex
✅ Bulk buying = best procurement rates
✅ Cash-and-carry = zero credit risk
✅ Inventory managed like Temple Gold
📊 4. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Sales (₹ Cr) | 24,143 | 30,976 | 42,840 | 50,789 | 59,358 |
| Net Profit (₹ Cr) | 1,099 | 1,492 | 2,378 | 2,536 | 2,707 |
| OPM (%) | 7% | 8% | 8% | 8% | 8% |
| ROE (%) | 13% | 15% | 13% | 13% | 13% |
| ROCE (%) | 13% | 16% | 20% | 19% | 18% |
📉 TTM PAT growth: Only 2%
🛒 Store count: 424 (9 added in Q1FY26)
So while topline is growing, margin expansion has stalled. General Merchandise (their best margin segment) hasn’t fully recovered post-COVID.
💸 5. Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| P/E | 97.7x |
| P/B | 12.3x |
| Market Cap | ₹2.64 Lakh Cr |
| Book Value | ₹329 |
| Fair Value Range | ₹2,500–₹3,200 (Based on 50–65x FY26E EPS of ₹49–₹52) |
🧮 Valuation logic:
Even for a no-debt, profit-generating compounder, 97x P/E is 🚨. Most bulls are baking in a sharp revival in margins and 20%+ earnings CAGR — but Q1FY26 says otherwise.
🍿 6. What’s Cooking – News, Triggers, Drama
- 🛍️ Q1 FY26 Results:
- Sales up 16.2% YoY to ₹15,932 Cr
- PAT up just 2.1% to ₹830 Cr
- 9 new stores added
- 📉 Profit growth tapering
- 🧦 General Merchandise still weak
- 🏪 Steady store additions, but no fireworks
No new format, no big e-commerce leap. In a world where Reliance is opening malls on Mars, DMart is still adding 10 stores a quarter in Surat.
🏦 7. Balance Sheet – How Much Debt, How Many Dreams?
- Debt: ₹820 Cr (mostly lease liabilities)
- Net Debt: Essentially zero
- Networth: ₹21,428 Cr
- Assets: ₹24,320 Cr
📍 91% of stores are owned, not leased
📍 Capital-efficient but asset-heavy model
This is the cleanest retail balance sheet you’ll ever see.
💵 8. Cash Flow – Sab Number Game Hai
| Metric | FY24 | FY25 |
|---|---|---|
| CFO (₹ Cr) | 2,746 | 2,463 |
| Capex (₹ Cr) | 2,468 | 2,185 |
| FCF (Rough) | ~₹300 | ~₹280 |
They invest all cash flows back into store expansion — no dividends, no buybacks. Like that uncle who only invests in FDs and scoffs at weddings.
📐 9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 18% |
| ROE | 13% |
| Inventory Days | 36 |
| Debtor Days | 1 |
| CCC | 30 |
| CFO/EBITDA | ~55% |
| CFO/Net Profit | ~91% |
Ratios are healthy, efficient, boringly brilliant. But ROE hasn’t grown much despite PAT growth — because asset base keeps ballooning.
💰 10. P&L Breakdown – Show Me the Money
| Quarter | Revenue (₹ Cr) | PAT (₹ Cr) | OPM (%) |
|---|---|---|---|
| Q1 FY26 | 15,932 | 830 | 8% |
| Q4 FY25 | 14,872 | 551 | 6% |
| Q3 FY25 | 15,973 | 724 | 8% |
| Q2 FY25 | 14,444 | 659 | 8% |
Revenue keeps compounding, but OPM remains stuck around 8%. Compare this with ~10–11% pre-COVID, and the margin pain becomes clear.
⚔️ 11. Peer Comparison – Who Else in the Game?
| Company | Sales (₹ Cr) | P/E | OPM % | ROCE % | PAT YoY | Notes |
|---|---|---|---|---|---|---|
| Avenue Supermarts | ₹61,649 | 97.7x | 8% | 18% | +2% | King of efficiency, but slowing |
| Vishal Mega Mart | ₹10,716 | 98.6x | 14.3% | 13% | +88% | Small base, growing fast |
| V-Mart Retail | ₹3,253 | 253x | 11.7% | 8.5% | +111% | High P/E, low scale |
| Electronics Mart | ₹6,964 | 34x | 6.5% | 10.3% | -22% | Low margin durables biz |
| Shoppers Stop | ₹4,628 | 532x | 15.3% | 7.9% | Loss | Luxe but loss-making |
DMart is still miles ahead on size and consistency, but relative value? Questionable.
🧾 12. Miscellaneous – Shareholding, Promoters
| Shareholder Type | Jun 2025 |
|---|---|
| Promoters | 74.64% |
| FIIs | 8.18% |
| DIIs | 9.08% |
| Public | 8.04% |
📉 Retail investors are slowly exiting — total shareholder count is falling.
💼 No major insider buying in recent quarters.
🧑⚖️ 13. EduInvesting Verdict™
DMart is like Rahul Dravid. Disciplined. Consistent. Dependable. But will it hit sixes again?
✅ Sales growing at 16–18%
🚫 Profit growth flat
🚫 Margins not expanding
🚫 Valuation still rich at ~98x P/E
Fair Value Range: ₹2,500–₹3,200
(based on 50–65x FY26E EPS of ₹49–₹52)
Unless margins move up or online/e-comm starts firing, this might just be a stock you respect, not one you rave about.
✍️ Written by Prashant | 📅 July 11, 2025
Tags: Avenue Supermarts, DMart, Retail Stocks, Radhakishan Damani, FMCG, Value Investing, Margin Pressure, Indian Retail, EduInvesting
