The Finance-Cost Signal From Last Quarter Just Got Much Louder
This filing covers the quarter ended June 30, 2025 - Q1 of Avenue Supermarts' FY2026. Revenue grew 16.28% year-on-year to Rs. 16,359.70 crore, but net income was essentially flat, down 0.11% to Rs. 772.81 crore. Operating Income (reconstructed) grew just 1.56% to Rs. 1,086.77 crore - a marginal improvement over Q4 FY2025's outright decline, but still deeply compressed against 16.28% revenue growth. Operating margin fell to 6.64% from 7.61% a year ago.
Finance Costs grew 83.58% year-on-year to Rs. 29.30 crore - the second straight quarter of a sharp finance-cost jump, following last quarter's 41.28% increase, and now large enough that it can no longer be dismissed as noise around a small base. Employee Benefit Expense also remained elevated, up 30.29% to Rs. 346.86 crore - the highest single-quarter employee-cost growth rate in this site's coverage of the company. D&A grew 20.20% and Other Expenses grew 21.68%, both also comfortably ahead of revenue growth. The effective tax rate held roughly flat at 26.92% versus 26.61% a year ago, so unlike the prior two quarters there was no tax-rate cushion offsetting the operating weakness.
The Prescription
Two consecutive quarters of finance costs growing 40%+ and then 80%+ year-on-year is no longer a footnote - it's now the fastest-growing line in the P&L by a wide margin, even though it remains small in absolute terms (Rs. 29.30 crore against Rs. 16,359.70 crore of revenue). Without a balance sheet in this filing type, there's no way to confirm from the source document alone whether this reflects new short-term borrowing, higher rates on existing facilities, or lease-liability interest scaling with new-store rollout - but the growth rate itself, doubling over two quarters, is worth a direct explanation the company hasn't yet given in any of the documents available for this post. Combined with employee costs now running at their highest growth rate in this arc, the case that DMart's cost base has structurally re-accelerated - not just rotated which line shows it - is getting stronger each quarter.
Key Financial Metrics
Quarter ended June 30, 2025 (consolidated), compared against Q1 FY2025 (quarter ended June 30, 2024)
FX: INR 85.71 = USD 1 (June 30, 2025 close).
| Metric | Q1 FY2026 (INR) | Q1 FY2026 (USD) | YoY Change | Note |
|---|---|---|---|---|
| Net Revenue (revenue from operations) | Rs. 16,359.70 crore | ~$1,908.7M | ⚠️ +16.28% | |
| Total Income (incl. other income) | Rs. 16,379.13 crore | ~$1,911.0M | ⚠️ +16.06% | |
| Total Expenses | Rs. 15,321.66 crore | ~$1,787.6M | 🔴 +17.35% | Faster than revenue for a fourth quarter in five |
| Operating Income (EBIT, reconstructed) | Rs. 1,086.77 crore | ~$126.8M | 🔴 +1.56% | 6.64% margin, down from 7.61% a year ago |
| Adjusted EBITDA» (reconstructed) | Rs. 1,318.47 crore | ~$153.8M | ⚠️ +4.40% | 8.06% margin, down from 8.98% |
| Finance Costs | Rs. 29.30 crore | ~$3.4M | 🔴 +83.58% | Second straight quarter of a sharp jump - see Beyond the Usual |
| Profit Before Tax | Rs. 1,057.47 crore | ~$123.4M | ⚠️ +0.32% | |
| Tax Expense | Rs. 284.66 crore | ~$33.2M | ⚠️ +1.48% | Effective rate 26.92%, roughly flat vs 26.61% a year ago - no cushion this quarter |
| Net Income | Rs. 772.81 crore | ~$90.2M | 🔴 -0.11% | 4.72% net margin, down from 5.50% |
| Basic / Diluted EPS | ~Rs. 11.87 / ~Rs. 11.81 (derived: Rs. 772.81 crore ÷ 65.073 crore shares) | ~$0.139 / ~$0.138 | 🔴 ~-0.1% | EPS not separately disclosed as a distinct figure in this filing; derived from net income and shares outstanding |
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
Finance Costs Have Now Roughly Doubled in Two Quarters
Finance Costs grew 41.28% YoY in [Q4 FY2025](/analysis/dmart/2025-03/#beyond-the-usual) and 83.58% YoY this quarter - a compounding acceleration, not a one-off spike, even though the absolute number (Rs. 29.30 crore) is still small next to revenue. This filing has no balance sheet to confirm the cause. The pattern matches, in direction if not yet in scale, [what DMart's own Q1 FY2027 filing would later disclose explicitly](/analysis/dmart/2026-06/) - new commercial-paper issuance funding continued store expansion - which would suggest this quarter is squarely inside that same financing shift, roughly a year before the company named it directly.
Stock Price and Valuation
DMart's stock closed this quarter at Rs. 4,372.30, up 7.09% from Q4 FY2025's Rs. 4,083.20 close - a continued rebound from the Q3 FY2025 selloff, even as the underlying operating trend (near-flat operating income, rising finance costs) has yet to show a clear turn.
DMart traded at roughly Rs. 2,84,519 crore (~$33.2B) market capitalization at this quarter's close (June 30, 2025) - a trailing-twelve-month P/E near 103x, up from Q4 FY2025's ~96x on the price rebound alone, since TTM earnings were essentially unchanged.
| Item | Value |
|---|---|
| Share price (June 30, 2025 close) | Rs. 4,372.30 |
| Shares outstanding | ~65.07 crore |
| Market capitalization | ~Rs. 2,84,519 crore (~$33.2B) |
| 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. 772.81 crore (this quarter) plus Q4 FY2025 (Rs. 550.79 crore), Q3 FY2025 (Rs. 784.65 crore), and Q2 FY2025 (Rs. 659.44 crore) - totals Rs. 2,767.69 crore, implying a trailing P/E near 102.8x. TTM earnings have now been essentially flat for two consecutive quarters (Rs. 2,768.56 crore then Rs. 2,767.69 crore) while the multiple has risen purely on price - a stock trading at a rich, roughly 100x trailing multiple against genuinely stalled trailing earnings growth is a combination that leaves little room for anything less than a clean reacceleration in the next quarter or two.
Peer-multiple comparison (trailing-twelve-month basis):
| Metric | This Quarter (TTM through Q1 FY2026) | Prior Quarter (TTM through Q4 FY2025) |
|---|---|---|
| TTM Net Income | Rs. 2,767.69 crore | Rs. 2,768.56 crore |
| Market Capitalization | ~Rs. 2,84,519 crore (~$33.2B) | ~Rs. 2,65,706 crore (~$31.1B) |
| Trailing P/E | ~102.8x | ~96.0x |
TTM earnings were essentially flat quarter-over-quarter (a marginal decline, in fact), so the entire ~7-point rise in the trailing multiple came from the price rebound alone - the reverse-DCF read here is that the market is pricing in a reacceleration that hasn't shown up in trailing earnings yet.
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. 2,978 |
| Base | Multiple settles near the middle of this arc's observed trailing-P/E band | 100x | ~Rs. 4,254 |
| Bull | Multiple recovers toward the richest level this arc has shown | 130x | ~Rs. 5,530 |
| Current (period-end close) | — | ~102.8x (actual) | Rs. 4,372.30 |
The actual close sits just above the base case, essentially pricing in the multiple's continued recovery without any corresponding pickup in trailing earnings growth - the gap this section flagged last quarter hasn't closed, it's widened slightly.