Dmart Sales Decelerate; Trent Expands Amidst High Valuation Scrutiny
Overview
Dmart's Q3 FY26 results reveal a slowdown in like-for-like sales growth to 5.6%, dampening consumer spending optimism despite 13.3% consolidated revenue rise. Rival Trent reported 17% revenue growth. Both retailers face intense investor scrutiny over their high valuations, especially as a new Dmart CEO prepares to implement acceleration strategies amid competition.
Stocks Mentioned
Sales Momentum Cools
Avenue Supermarkets, operator of the Dmart retail chain, reported its third quarter results for fiscal year 2026, revealing a slowdown in like-for-like sales growth. The figures offer a critical look at Indian consumer spending trends and the company's competitive footing.
Dmart's like-for-like growth, measuring sales from stores operational for at least 24 months, registered 5.6% in the December 2025 quarter. This marks a deceleration from the 8.3% recorded a year earlier, raising questions about the anticipated upturn in consumer spending.
The company attributed the slower growth partly to deflation in staple goods prices, a consequence of recent Goods and Services Tax (GST) reductions on daily essentials. The extent to which competition from quick commerce and other large retailers contributed remains a subject of further analysis.
Consolidated Performance Remains Strong
Despite the core growth concerns, Avenue Supermarkets posted robust double-digit growth on a consolidated basis. Revenue from operations climbed 13.3% year-on-year to ₹18,101 crore for the quarter.
Cost management efforts paid off, expanding operating profit margins by 40 basis points to 8.1%. Consolidated net profit surged 18.3% year-on-year to ₹855.8 crore.
Retail Footprint Continues to Expand
The retailer expanded its physical presence, increasing its total retail business area to 18.3 million square feet from 16.1 million square feet a year prior.
Dmart added 10 new stores in the third quarter, bringing its nationwide network to 442 stores by the end of December 2025.
Trent Reports Steady Growth
Rival Trent, operator of Westside and Zudio, reported its business update for the same quarter. Standalone revenue from product sales grew 17% year-on-year to ₹5,220 crore.
Trent also pursued aggressive expansion, opening a net of 17 Westside stores and 48 Zudio outlets, increasing its total store count to 1,101.
Valuation Concerns Loom
Both Avenue Supermarket and Trent continue to trade at exceptionally high valuations, with P/E ratios exceeding 90 and 85 times, respectively. The current mediocre growth trends are prompting investors and analysts to re-evaluate these premium valuations.
New Leadership at Dmart
Investors are keenly awaiting the strategies of Anshul Asawa, who assumes charge as the new CEO and Managing Director of Avenue Supermarket on February 1. His plan to accelerate growth will be a key focus.
