Note: Call covered FY26 annual results alongside Q1 FY27 context. Date format: 28 Jul 2026.
Event Participants
Executives
5 Anshul Asawa, Niladri Deb, Ramakant Baheti, Rushabh Ghiya, Vikram Dasu
Analysts
19 Abneesh Roy, Aditya Soman, Ali Asghar Shakir, Amit Sachdeva, Anand Shah, Arnab Mitra, Ashish Kanodia, Avi Mehta, Devanshu Bansal, Garima Mishra, Jay Gandhi, Jigar Shah, Karan Taurani, Latika Chopra, Manoj Menon, Nihal Mahesh Jham, Percy Panthaki, Videesha Sheth, Vivek Maheshwari
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹67,000 crores | +16% YoY; stand-alone ~₹67,000 cr for FY26 |
| LFL Growth | 8.1% | FY26 full year; stores >2 years old |
| Store Count | 500+ | 85 stores added in FY26; entered 5 new states |
| Retail Business Area | 20.6 mn sq ft | Expanded with new store additions |
| Revenue per Sq Ft | ₹33,422 | Flat YoY |
| Bill Cuts | ~40 crores | Healthy growth in transactions during FY26 |
| EBITDA Margin | 7.8% | ~7.85% standalone; flat YoY |
| PAT | ₹3,224 crores | PAT margin 4.8%; 25 bps lower YoY |
| Gross Margin | +16 bps | Expansion without product mix change |
| Employee Cost | +27 bps | Capability build + wage code implementation |
| Other Expenses | -9 bps | Operating leverage benefit |
| Inventory Days | 33.2 | Up due to warehouse expansion |
| Days Payables | 7.2 | Flat; vendor payment strategy unchanged |
| Net Borrowings | ₹965 crores | ₹2,267 cr including AS-116; net debt ex-AS-116 |
| Fixed Asset Turnover | 3.2x | Stable |
| Inventory Turnover | 12.8x | Lower due to higher inventory days |
| ROE | 17.1% | Slightly lower YoY |
| ROCE | 13.5% | Slightly lower YoY |
| Operating Cash Flow | ₹4,168 crores | Strong cash generation |
| Q1 FY27 Revenue Growth | 15% | vs 13% in Q3 FY26, 19% in Q4 FY26 |
Geographic & Segment Commentary
Metros (Mumbai, Bangalore, etc.): Old, dense stores with high throughput are reaching saturation; SSG impacted by a combination of capacity limits, cannibalization from nearby new stores, and quick commerce competition. Management expects SSG to remain around current levels.
Tier-1/Tier-2 Cities: Growth tracking above company average; stores ramp up faster in cities where the DMart brand is established; quick commerce penetration lower in these markets. Management sees minimal QC impact beyond dense metros.
New States (5 entered FY26): Focus shifting to building store density in these new markets while continuing expansion in established geographies; cluster-based approach drives operational efficiency.
Avenue Supermarts E-Commerce (DMart Ready): Consolidated from 18 to 11 cities; sales +17%, but EBITDA declined 43% with an 84 bps drain; PBT loss of ₹307 crores, 24% higher. Focus on proving a sustainable, profitable model in 11 key cities with 6-hour delivery and tailored assortment.
Align Retail (grocery packing): Sales +16.5%, PAT +24%; steady contribution.
Avenue Food Plaza: Revenue +35.5%, PAT margin of 9%; turned around from prior-year loss driven by expansion; on course for healthy profitability.
Company-Specific & Strategic Commentary
Store Expansion Target: Internal benchmark of ~15% of store base annually (approx. 75 stores); actuals may vary a few percentage points due to real estate acquisition cycle; pipeline remains strong.
Lease Strategy: 68 stores on long-term lease (15 of 85 added in FY26); management increasingly open to leases where land acquisition is challenging, particularly in NCR and other geographies.
Technology Modernization: Upgrading ERP, data stack, and systems across operations; investment to support a much larger footprint; no material near-term margin impact anticipated.
E-commerce Focus: All resources channeled into 11 cities; improving assortment for online buyers, 6-hour delivery, and digital user experience; no plans for instant delivery model; separate from physical store operations.
Private Label Strategy: 20-20-20 principle unchanged (20% price advantage, 20% margin vs benchmark, 20% volume share); no deliberate shelf-space push; customer choice drives private label mix.
Capability Building: Staff costs built ahead of the curve; wage code implemented from December 2025 contributing to the 33% increase in employee costs; productivity initiatives and mechanization optimizing non-permanent headcount.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Store Additions | ~15% of store base annually | Depending on real estate cycle; pipeline strong; ±2-3% variation expected |
| LFL/SSG Growth | Around current FY26 levels (~8.1%) | Metro saturation and QC competition persist; new nearby stores mitigate pressure |
| Gross Margin | 14-15% range | North star; not expanding at cost of customer proposition |
| Net Margin | ~5% range | North star; no material downside risk seen |
| E-commerce Profitability | Prove model in 11 cities | Reduce losses significantly before scaling further |
| Capex | Sustained elevation | FY26 capex ₹4,000+ crores; funds not a constraint |
| Borrowings | Could reach ~₹2,000 crores | NCD ₹1,000 cr for long-tenor funding; cost reduction |
| Capital Self-Sufficiency | Within 2-3 years | Existing store base expected to fund expansion |
Risks & Constraints
| Risk | Context |
|---|---|
| Quick Commerce Competition | Amazon Now, Flipkart, Blinkit scaling aggressively including beyond metros; management sees impact in dense metros and expects persistence; organized retail penetration still early teens, providing headroom |
| Metro Store Saturation | Old stores at peak throughput; SSG constrained in metros like Mumbai and Bangalore; cannibalization from nearby new stores; management addressed via opening adjacent stores |
| Wage Inflation | Wage Code implemented December; employee costs up 33% in FY26; further wage cost increases expected |
| E-commerce Losses | PBT loss of ₹307 crores; EBITDA drain up 43%; consolidated to 11 cities to reduce losses; exit from 7 cities |
| Working Capital Build | Inventory days up to 33.2 due to warehouse expansion; payables maintained at 7.2 days |
| Real Estate Bottlenecks | Land availability, regulatory approvals, and 2-3 year construction cycle constrain store additions; lease option partially mitigates |
| Revenue Growth Volatility | Quarterly growth ranged 13-19% in last 3 quarters due to deflation (staples), panic buying, and spillover effects |
Q&A Highlights
Quick Commerce Competition & FMCG Vendor Relationships
- Question: (Abneesh Roy - Nuvama) asked whether FMCG vendors are shifting focus to quick commerce given Amazon Now and Flipkart scale-up, and whether DMart retains right-to-win on assortment.
- Answer: No shift in vendor attention; FMCG companies are doubling down on DMart, now the #1 individual retailer for many; DMart brings scaled brands from new channels quickly, including D2C brands that gain traction online (Anshul Asawa).
SSG Outlook & Metro Saturation
- Question: (Avi Mehta - Macquarie, Nihal Mahesh Jham - HSBC, Percy Panthaki - IIFL) asked whether SSG can return to double digits and whether the current level is the new normal.
- Answer: Mature metro stores with high throughput and footfalls will likely keep SSG at current FY26 levels (~8.1%); new nearby stores will absorb pressure; quick commerce impact expected to persist over next few years; no plan to drive SSG back to double digits (Anshul Asawa).
Store Expansion & Lease Strategy
- Question: (Amit Sachdeva - UBS, Manoj Menon - ICICI Securities, Ashish Kanodia - Citigroup) asked whether 15% annual store growth is too conservative and what bottlenecks prevent 100+ stores annually.
- Answer: 15% is deliberate; land acquisition and 2-3 year construction cycle are structural constraints; capital and people are not constraints; 68 lease stores (15 added in FY26) in base; open to more leases where suitable (Anshul Asawa, Niladri Deb).
E-commerce Consolidation & Profitability
- Question: (Arnab Mitra - Goldman Sachs, Latika Chopra - JP Morgan, Vivek Maheshwari - Jefferies) asked why DMart Ready sticks to 6-hour slotted delivery rather than instant delivery, and what KPIs are tracked.
- Answer: DMart Ready targets planned monthly/fortnightly purchases where customer value is significant; no plans for instant delivery; industry-standard KPIs tracked internally but not disclosed; focus on proving profitable model in 11 cities before scaling (Anshul Asawa, Vikram Dasu).
Margins & Staff Cost Structure
- Question: (Anand Shah - Axis Capital, Latika Chopra - JP Morgan) asked about gross margin drivers and whether staff cost buildup is complete.
- Answer: GM +16 bps without product mix change; staff costs built ahead of curve for larger organization; wage code contributed to Q4 employee cost increase; further capability building possible (Anshul Asawa, Niladri Deb).
Private Label & Assortment
- Question: (Aditya Soman - CLSA) asked whether private label strategy has changed since new CEO took over and whether shelf-space push is deliberate.
- Answer: 20-20-20 principle unchanged; no conscious shelf space drive; customer choice drives private label mix; FMCG private labels only where true value can be delivered with reasonable margins (Anshul Asawa).
Funding, Debt & Capex
- Question: (Jigar Shah - Bernstein, Devanshu Bansal - Emkay) asked about ₹1,000 cr NCD approval vs ₹800 cr CP outstanding and ROE pressure.
- Answer: NCD provides cost reduction and longer tenor without interest rate risk; total borrowings could reach ~₹2,000 cr for capex; capex was ₹4,000+ cr in FY26; existing store base expected to fund expansion within 2-3 years (Niladri Deb).
Employee Cost Structure
- Question: (Jigar Shah - Bernstein) asked about disparity between permanent (+4,000) and contractual (+2,200) employee additions in FY26.
- Answer: 75-80% permanent additions linked to store openings; productivity initiatives and mechanization optimized non-permanent headcount; frontline staff (cashiers, packers, shop assistants) are non-permanent while managers are permanent (Niladri Deb).
Value Proposition vs Quick Commerce
- Question: (Manoj Menon - ICICI Securities, Ali Asghar Shakir - Motilal Oswal, Karan Taurani - Elara) asked whether DMart's value proposition is diminishing as Blinkit scales and QC expands beyond metros.
- Answer: Organized trade penetration including e-commerce is still in early teens; DMart remains best value retailer with majority of products competitive; basket-level savings significantly exceed 10% of average basket value; QC impact minimal beyond dense metros (Anshul Asawa).
Key Takeaway
Avenue Supermarts delivered FY26 revenue of ₹67,000 crores (+16% YoY) with LFL growth of 8.1%, EBITDA margin of 7.8%, and PAT of ₹3,224 crores (4.8% margin, 25 bps lower YoY). The company added 85 stores, crossing 500 total, and entered 5 new states, with 68 stores now on long-term lease (15 added in FY26). Management's strategy under new CEO Anshul Asawa centers on ~15% annual store base growth, modernization of technology and data infrastructure, and consolidation of DMart Ready e-commerce into 11 cities to prove a sustainable, profitable model after posting a ₹307 crore PBT loss. Metro SSG remains constrained by store saturation and quick commerce competition — expected to persist — while tier-1/2 cities grow above average. Management maintained 14-15% gross margin and ~5% net margin as north stars, with no material downside risk seen. Key watch points include wage inflation from wage code implementation (+33% employee costs), the path to e-commerce profitability, and competitive intensity as quick commerce players expand beyond metros.