DMart Q2 Profit Rises 8.5% to ₹743 Crore as Wage Costs Bite

Avenue Supermarts, the company behind the DMart hypermarket chain, lifted July–September sales by nearly 18%, but rising staff costs meant profit grew at less than half that pace. On Saturday, 10 October, the retailer reported a consolidated net profit of ₹743.57 crore for the second quarter of FY27, up 8.5% from ₹685.01 crore a year earlier.

Revenue from operations rose 17.8% to ₹19,644.01 crore, compared with ₹16,676.30 crore in the same quarter last year. EBITDA climbed 14.7% to ₹1,393 crore from ₹1,214 crore. The EBITDA margin, however, narrowed by 20 basis points to 7.1%, and the net profit margin slipped to 3.8% from 4.1%. Basic earnings per share came in at ₹11.40, against ₹10.53 a year ago.

A sharp sequential dip in profit

The quarter-on-quarter picture is less flattering. Consolidated profit fell about 13.7% from ₹860.44 crore in the April–June quarter, even as revenue rose 4.5% from ₹18,794.53 crore, according to figures reported by the Free Press Journal. Total expenses grew 5.6% sequentially to ₹18,632.70 crore. Depreciation rose to ₹317.75 crore from ₹287.70 crore, and finance costs increased to ₹63.90 crore from ₹54.28 crore, reflecting a bigger store base and more leased space.

Part of that decline may be seasonal, since the April–June quarter has tended to be DMart’s stronger period. Even so, profit before tax fell 13.4% sequentially to ₹1,024.84 crore. That is a steeper fall than seasonality alone would normally explain, and it is likely to draw attention when trading resumes on Monday.

Standalone business: stores carry the growth

The standalone entity, which houses the physical DMart stores, posted revenue of ₹19,206 crore, an 18.4% increase over ₹16,219 crore a year earlier. Standalone EBITDA rose 14.1% to ₹1,403 crore, though the margin eased to 7.3% from 7.6%. Standalone profit after tax increased 7.6% to ₹804 crore from ₹747 crore, with the PAT margin at 4.2% versus 4.6% last year.

Operating metrics were the brightest part of the release. DMart opened 15 stores during the quarter, taking its network to 518 outlets spread across 21.4 million sq ft of retail area. Same-store sales growth for stores more than two years old improved to 9.5% from 6.8%, a sign that footfall and basket sizes at mature stores are recovering. The number of bills generated in the quarter rose to 11.1 crore from 9.7 crore a year earlier.

For the first half of FY27, consolidated revenue stood at ₹38,438.54 crore, up 16.4%, while profit after tax rose 10% to ₹1,603.42 crore from ₹1,457.66 crore. Half-yearly EBITDA was ₹2,892 crore, with a margin of 7.5%.

Wage inflation squeezes margins

Management pinned the margin pressure on people costs. Chief Executive Anshul Asawa said entry-level wage inflation had pushed operating expenses marginally higher during the quarter, while reiterating that the chain would keep prioritising value pricing for shoppers, according to comments carried by The Economic Times.

That trade-off sits at the heart of DMart’s model. The company has historically chosen to pass on savings to customers rather than defend margins, betting that low prices drive volume and faster inventory turns. With labour costs rising and competition from quick-commerce players and large-format rivals intensifying, the room to absorb higher expenses without hurting profitability has narrowed.

The online arm, Avenue E-Commerce, which runs DMart Ready, remains a work in progress. The service now operates in 11 cities, down from 19 a year earlier, as the company consolidates its footprint. Vikram Dasu, chief executive of Avenue E-Commerce, said the focus remains on operational efficiency and customer experience. The statutory auditor, S R B C & Co LLP, issued an unmodified limited review report on the results.

Why it matters for investors

DMart is the first large consumer-facing company to report for the September quarter, and its numbers are often read as a barometer of household spending on groceries and everyday goods. On that count, the signal is mixed but broadly positive. Revenue growth of nearly 18% and a clear pick-up in same-store sales suggest consumption in its core value segment is holding up despite elevated fuel prices and an uncertain rate outlook.

The concern is earnings quality. When profit grows at roughly half the rate of revenue, investors start asking whether growth is coming at the cost of returns. The company’s market capitalisation stood at about ₹2.29 lakh crore as of 10 October, based on NSE data cited by Upstox, and the stock trades at a premium valuation that leaves little room for margin disappointments. Analysts will be watching whether the wage-led increase in costs is a one-time reset or a structural shift.

The quarter also offers a read-across for the wider organised retail sector. If entry-level wage inflation is biting at a famously cost-disciplined operator like DMart, peers in apparel, quick commerce and supermarkets are likely to face similar pressure on store-level economics in the coming quarters.

What happens next

The first test comes on Monday, 12 October, when markets react to the results. Brokerages are expected to revisit their margin assumptions for FY27 after the earnings commentary. Store additions typically accelerate in the second half of the financial year, and investors will track whether DMart can keep up its expansion pace while bringing operating costs under control.

Key items on the watch list include the trajectory of same-store sales growth through the festive quarter, any further rationalisation of DMart Ready, and whether management takes calibrated price action to protect margins. With Diwali demand falling in the October–December quarter, the next set of numbers will show whether the recovery in footfall translates into stronger profitability.