DMart Ready Shifts Focus to Big Cities Amidst Fierce Quick Commerce Rivalry

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AuthorAnanya Iyer|Published at:
DMart Ready Shifts Focus to Big Cities Amidst Fierce Quick Commerce Rivalry
Overview

DMart Ready is concentrating its online grocery operations on major metropolitan areas, exiting six smaller markets in FY26. This strategic pivot comes as competition from rapid delivery services like Blinkit and Zepto intensifies. While revenue is projected to exceed ₹4,000 crore for FY26, losses are widening at the EBITDA level, driven by investments in faster delivery to compete with rivals. Avenue Supermarts shares saw a modest gain, buoyed by Q3 margin improvements, though sustainability concerns linger.

Strategic Pivot to Metro Markets

DMart Ready, Avenue Supermarts' online grocery arm, is sharpening its strategic focus on India's largest metropolitan areas. This move involves rationalizing its presence by exiting six smaller markets during the first half of fiscal year 2026. The strategy signals a direct response to escalating competition in the quick commerce space from rivals such as Blinkit, Zepto, and Swiggy Instamart, who are aggressively expanding their rapid delivery services.

Revenue Growth vs. Widening Losses

Analysts project DMart Ready's annual revenue to surpass ₹4,000 crore by the close of FY26, a significant jump from ₹3,502 crore in FY25. While the retailer's topline is stabilizing, with Q3 FY26 revenue growth around 20% (up from approximately 16% in Q2 FY26), its losses are widening. EBITDA losses have reportedly hovered between ₹14-26 crore in recent quarters, a marked increase from the ₹10-11 crore range seen a year prior. This increased expenditure is attributed to crucial investments in enhancing delivery speed and convenience to meet evolving customer expectations in the fast-paced quick commerce segment.

Investor Reaction and Margin Scrutiny

Avenue Supermarts' shares closed up 0.75% at ₹3,833.45 on Monday. The stock saw intraday gains after the company reported a surprise beat on Q3 margins. Gross and EBITDA margins each rose by 60 and 50 basis points, respectively, year-on-year. However, some analysts, including those at Goldman Sachs, caution that these margin improvements may not be sustainable long-term, viewing them as one-off events linked to clearing pre-GST inventory.

For Q3 FY26, Avenue Supermarts posted an 18.3% year-on-year rise in consolidated net profit to ₹856 crore. This profit growth occurred alongside the company's slowest like-for-like or same-store sales growth in Q3, which stood at 5.6%. Consolidated revenue grew 13.3% year-on-year to ₹18,101 crore, impacted by deflationary prices in staple goods.

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