The Compression Is Back, and Sharper Than Before
This filing covers the quarter ended September 30, 2024 - Q2 of Avenue Supermarts' FY2025. Revenue grew 14.42% year-on-year to Rs. 14,444.50 crore, decelerating from Q1 FY2025's 18.57%. Total expenses grew 14.95% to Rs. 13,574.83 crore - genuinely faster than revenue, and the gap compounds sharply at the operating-income line: Operating Income (reconstructed) grew just 5.99% to Rs. 919.51 crore, the weakest operating-income growth in this site's coverage of DMart outside the COVID-affected quarters. Operating margin fell to 6.37% from 6.87% a year ago.
Employee Benefit Expense grew 26.93% to Rs. 285.24 crore - a third consecutive quarter in the high-20s (29.12% in Q4 FY2024, 29.19% in Q1 FY2025), while revenue growth itself has now decelerated for two straight quarters. That combination - decelerating revenue against a persistently elevated employee-cost growth rate - is the sharpest version yet of the pattern flagged last quarter as worth watching, and it's now clearly not a one-off. D&A (+19.17%) and Other Expenses (+24.56%) also both outgrew revenue again.
The Prescription
This is the moment the employee-cost trend flagged over the prior two quarters stops being a "worth watching" footnote and becomes the central story: three straight quarters near 27-29% payroll growth, against decelerating revenue growth, is now doing real and visible damage to operating income (+5.99% this quarter, down from double digits every prior quarter this year). If this is store-network expansion catching up with new-store staffing, it should show up alongside a comparable acceleration in store-count growth - something this bare filing format still doesn't disclose. If it isn't, this is a genuine cost-discipline problem the company needs to address directly rather than let compound for a fourth quarter. Either way, "employee costs" has replaced "depreciation" and "Other Expenses" as the line this site's coverage will keep tracking closest going forward.
Key Financial Metrics
Quarter ended September 30, 2024 (consolidated), compared against Q2 FY2024 (quarter ended September 30, 2023)
FX: INR 83.83 = USD 1 (September 30, 2024 close).
| Metric | Q2 FY2025 (INR) | Q2 FY2025 (USD) | YoY Change | Note |
|---|---|---|---|---|
| Net Revenue (revenue from operations) | Rs. 14,444.50 crore | ~$1,723.1M | ⚠️ +14.42% | Decelerating from +18.57% last quarter |
| Total Income (incl. other income) | Rs. 14,478.02 crore | ~$1,727.1M | ⚠️ +14.34% | |
| Total Expenses | Rs. 13,574.83 crore | ~$1,619.3M | 🔴 +14.95% | Genuinely faster than revenue |
| Operating Income (EBIT, reconstructed) | Rs. 919.51 crore | ~$109.7M | 🔴 +5.99% | 6.37% margin, down from 6.87% a year ago |
| Adjusted EBITDA» (reconstructed) | Rs. 1,127.29 crore | ~$134.5M | ⚠️ +8.20% | 7.80% margin, down from 8.25% |
| Finance Costs | Rs. 16.32 crore | ~$1.9M | ✅ +4.68% | |
| Profit Before Tax | Rs. 903.19 crore | ~$107.7M | ⚠️ +6.02% | |
| Tax Expense | Rs. 243.75 crore | ~$29.1M | ⚠️ +6.63% | Effective rate 26.99%, roughly flat vs 26.84% a year ago |
| Net Income | Rs. 659.44 crore | ~$78.7M | ⚠️ +5.79% | 4.57% net margin, down from 4.94% |
| Basic / Diluted EPS | Rs. 10.14 / Rs. 10.11 | ~$0.121 / ~$0.121 | ⚠️ ~+5.8% (basic) |
Operating Income and Adjusted EBITDA are reconstructed as PBT + Finance Costs [+ D&A for EBITDA]. No balance sheet or cash flow statement is disclosed as a separable quarter figure in this filing type. Paid-up equity share capital held flat at Rs. 650.73 crore (~65.07 crore shares).
Beyond the Usual
Employee Costs, Three Quarters Running
Employee Benefit Expense has now grown 29.12% ([Q4 FY2024](/analysis/dmart/2024-03/)), 29.19% ([Q1 FY2025](/analysis/dmart/2024-06/)), and 26.93% (this quarter) year-on-year in three consecutive quarters - well above revenue growth in all three, and increasingly the dominant driver of margin compression as the gap has widened from marginal ([Q4](/analysis/dmart/2024-03/)) to genuinely damaging (this quarter, where it's a real contributor to operating income growing just 5.99%).
Stock Price and Valuation
DMart's stock closed this quarter at Rs. 5,096.30, up 8.05% from Q1 FY2025's Rs. 4,716.75 close and the highest close in this site's coverage of the company to date - a rally that, notably, ran directly against this quarter's own weakening fundamentals, since results for the quarter weren't disclosed until after the quarter's close.
DMart traded at roughly Rs. 3,31,632 crore (~$39.6B) market capitalization at this quarter's close (September 30, 2024) - a trailing-twelve-month P/E near 123x, the richest multiple in this site's coverage of DMart to date, even as this quarter's own operating-income growth was the weakest outside the COVID-affected quarters.
| Item | Value |
|---|---|
| Share price (September 30, 2024 close) | Rs. 5,096.30 |
| Shares outstanding | ~65.07 crore |
| Market capitalization | ~Rs. 3,31,632 crore (~$39.6B) |
| Enterprise value | Not computable without a balance sheet - market cap used as a proxy below |
No real DCF is possible without a balance sheet. Trailing-twelve-month net income through this quarter - Rs. 659.44 crore (this quarter) plus Q1 FY2025 (Rs. 773.68 crore), Q4 FY2024 (Rs. 563.14 crore), and Q3 FY2024 (Rs. 690.41 crore) - totals Rs. 2,686.67 crore, implying a trailing P/E near 123.4x. This is the widest gap in this site's coverage between where the stock is priced (its richest multiple yet) and where the underlying quarter's own operating trend is pointing (its weakest operating-income growth outside COVID) - the two data points that should move together are moving apart, and that gap, not any single number in this quarter's P&L, is the most important thing to watch heading into the festive Q3.
Peer-multiple comparison (trailing-twelve-month basis):
| Metric | This Quarter (TTM through Q2 FY2025) | Prior Quarter (TTM through Q1 FY2025) |
|---|---|---|
| TTM Net Income | Rs. 2,686.67 crore | Rs. 2,650.58 crore |
| Market Capitalization | ~Rs. 3,31,632 crore (~$39.6B) | ~Rs. 3,06,934 crore (~$36.8B) |
| Trailing P/E | ~123.4x | ~115.8x |
TTM earnings barely moved (+1.4%) while the multiple expanded a full 7-8 points - confirming the gap is being driven entirely by price, not by any acceleration in the underlying earnings base.
Bull/base/bear scenario check (multiple-based sanity check applied to TTM earnings, not a full multi-year DCF - this site's established range across the arc, since a balance sheet-based EV/EBITDA build isn't available for this filing type):
| Scenario | Key assumption | Implied trailing P/E | Implied price/share |
|---|---|---|---|
| Bear | Multiple reverts toward the low end of this arc's observed trading range | 70x | ~Rs. 2,891 |
| Base | Multiple settles near the middle of this arc's observed trailing-P/E band | 100x | ~Rs. 4,129 |
| Bull | Multiple holds near the richest level this arc has shown | 130x | ~Rs. 5,368 |
| Current (period-end close) | — | ~123.4x (actual) | Rs. 5,096.30 |
The actual close already sits closer to the bull scenario than the base case - the market is pricing DMart for a continuation of its richest-ever multiple at exactly the quarter its own operating income grew slowest outside COVID, leaving little room for anything but a clean re-acceleration before the multiple itself becomes the story.