Company Update : Avenue Supermarts By JM Financial Services
Miss on revenue; store additions lower v/s expectations
* Q2FY26 revenue up ~15% YoY to ~INR 162 bn (2% miss vs. initial estimate): Q2FY26 revenue grew ~15% YoY (vs 16/17% YoY growth in Q1FY26/Q4FY25) to INR 162 bn. We note revenue growth was 2% lower v/s our initial estimates of 17.5%
* Store addition below our expectation; 8 stores added QoQ: Dmart added 8 stores on a QoQ basis (below our initial estimate of 13 stores in Q2), taking the store count to 432 in Q2FY26. Assuming a new store area of ~44k sq ft, it added ~0.4 mn sq ft QoQ in Q2, taking the EOP total selling space to ~18 mn sq ft.
* Sales/sq ft up 1% YoY: Based on our selling space assumptions, estimated sales/sq ft was up 1% YoY to ~INR 9.1 k/sq ft (flat vs. Q2FY20).
* We estimate ~12%/8% YoY EBITDA/PAT growth in Q2: We estimate a ~30 bps YoY dip in EBITDA margin to 7.6% in Q2FY26, despite expectations of flat gross margin, largely on account of negative leverage. Overall, we expect 12% YoY growth in EBITDA to INR 12.3 bn. Based on our selling area estimates, we expect EBITDA/sq ft of ~INR 694, down 2% YoY despite 1% increase in sales/ sq ft due to an estimated 10% and 4% increase in staff and other expenses per sq ft respectively. We expect PAT to grow 8% YoY to INR 7.7 bn, lower vs. EBITDA growth largely on account of increase in depreciation expenses and lower other income.
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SEBI Registration Number is INM000010361
