Avenue Supermarts (DMart) shares dropped over 4% after the company reported a June quarter profit of ₹936 crore. Investors are reacting to plans to raise ₹1,000 crore via debt and concerns over rising competition from quick commerce platforms in metro markets.
Avenue Supermarts Ltd, which operates the popular DMart retail chain, saw its shares decline by more than 4% on the National Stock Exchange on Monday. The market movement followed the release of its financial results for the quarter ending June 30, 2026, and a disclosure regarding the company's intention to raise up to ₹1,000 crore through non-convertible debentures.
Financial Performance and Debt Context
For the June quarter, the company reported a standalone profit after tax of ₹936 crore. This reflects a 12.8% increase compared to the same period last year. While the profit grew, investors appear focused on the rising use of borrowings. Exchange filings and brokerage reports indicate that the company’s debt levels have increased, with some estimates suggesting a rise to approximately ₹25 billion from ₹11 billion year-on-year. This shift toward higher debt usage, combined with the new fund-raising plan, comes at a time when the company continues to spend heavily on store expansion, with plans to add roughly 75 new stores in each of the next two financial years.
Impact of Quick Commerce Competition
A major point of discussion among market observers is the intensifying competition from quick commerce players in metropolitan areas. Several brokerages have noted that this competition is creating pressure on same-store sales growth, a key metric for retail companies. Some analysts pointed out that profit growth has trailed revenue growth in a majority of the past 13 quarters, which they attribute to higher operating costs and the need to defend market share against rapid delivery services. The company's 'DMart Ready' business segment has also seen a strategic shift, exiting 14 cities over the past 15 months to focus its presence in 11 larger towns.
Differing Market Views
Brokerage houses hold varying views on the company's prospects. Some analysts maintain a positive stance, citing the company's long-term business model resilience and the expectation that cost pressures may stabilize in the coming quarters. They argue that the core retail format remains robust despite the quick commerce surge. On the other hand, several firms have adopted a more cautious or negative outlook, citing the stalling of growth in metro markets and the potential for the current competitive environment to limit profit margins. These analysts suggest that the risk-reward balance remains challenging until there is a clearer recovery in top-line growth.
The key monitorable for investors going forward will be whether the company can maintain its profit margins while balancing aggressive store additions and the rising competitive intensity from quick commerce. Management commentary on these challenges and the utilization of the proposed debt funding will be essential updates for stakeholders to track in the coming quarters.