dmart q1 preview: RK Damani's DMart may report multifold rise in profit on Saturday

NEW DELHI: Radhakishan Damani-led (DMart) is likely to report a multifold jump in year-on-year (YoY) June quarter profit on Saturday. This is after the company, in its business update, suggested a 95 per cent growth in YoY sales for the quarter.

In its initial update on the quarter, DMart earlier this week said its standalone revenues jumped nearly two-fold to Rs 9,806.89 crore in the June quarter from Rs 5,031.75 crore in the year-ago quarter. Analysts are expecting a multifold rise in the retailer’s profit on a low base.

expects the company’s profit after tax to grow multifold to Rs 646.90 crore from Rs 115.10 crore in the same quarter last year. Centrum Broking expects profit to come in at Rs 559.50 crore, up 386 per cent YoY. YES Securities sees profit jumping 363 per cent to Rs 533.60 crore.

Edelweiss expects DMart to report a gross margin of 15 per cent, marginally lower than the trend seen in Q1 quarters historically, as the business is still to normalise completely and also due to the fact that DMart also highlighted the impact on non-foods business in previous quarters.

“Given its cost initiatives are sustaining, we build in an Ebitda margin of 9.8 per cent (Q1FY20: 10.3 per cent) with Ebitda at Rs 960 crore,” the brokerage said. Centrum Broking pegs DMart’s Ebitda margin at 8.6 per cent, up 450 basis points YoY.

Kotak Institutional Equities said that DMart’s reported revenue growth for the quarter was on expected lines and seemed to be driven by a revival in same-store sales growth (SSSG) and the seasonality effect led by the reopening of schools and offices (stationery, other supplies etc) as well as the contribution from 10 new stores that it added during the quarter.

For Securities, DMart revenues were weak, in line with the trend seen in the last two-to-three quarters. It said revenues looked strong, but not when adjusted for store addition.

Motilal Oswal Securities said its channel checks indicated that DMart’s soft store performance could be attributed to the high consumer traction on online platforms as its higher revenue contribution stores are largely based in metros and Tier I cities.

Growth momentum will be impacted by slowdown and high inflation while margins may remain under pressure led by operating cost of DMart Ready business and inferior mix due to higher inflation, YES Securities said.

The company’s total store count stands at 294.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)