Avenue Supermarts Q2 FY27 Results Analysis: EBITDA Margin Slips 89 bps, Revenue Jumps 17.8% (DMART)
Avenue Supermarts Ltd's Q2 FY27 numbers came in soft, with revenue of Rs. 19,644.01 Cr (+17.80% YoY) and PAT growth of +8.49% YoY. Here's a quick read of what worked, what to watch, and what management said.
| Results date | October 10, 2026 |
|---|---|
| Quarter | Q2 FY 2026-2027 |
| Revenue (Q2) | Rs. 19,644.01 Cr (+17.80% YoY) |
| PAT (Q2) | Rs. 742.98 Cr (+8.49% YoY) |
| EBITDA margin | 7.09% (-19 bps YoY) |
| EPS (Q2) | Rs. 11.40 (+8.26% YoY) |
| Market cap | Rs. 229,404.21 Cr |
| CMP | Rs. 3,516.80 |
Quarter Snapshot
Revenue grew 17.8% YoY to Rs.19,644 Cr and accelerated from Q1's 15.14%, but PAT grew only 8.49% as EBITDA margin fell to 7.09% (−89 bps QoQ) and net margin of 3.78% missed management's ~5% North Star target. H1 operating cash flow fell 60.5% to Rs.552.57 Cr (CFO/PAT 0.34×) on a Rs.1,387 Cr inventory build, while current borrowings more than doubled to Rs.2,628.66 Cr, lifting finance costs 82.78%. Gross margin held at 14.93% within the 14–15% guided band, and the DMart Ready subsidiary loss persisted at Rs.75.35 Cr for the quarter.
Key Investment Insights
Key Positives
- Revenue grew 17.80% YoY to Rs.19,644 Cr, accelerating from Q1 FY27's 15.14% YoY; H1 revenue of Rs.38,439 Cr was 16.35% above H1 FY26's Rs.33,036 Cr
- Gross margin was 14.93%, inside the guided 14–15% band, down only 14 bps YoY despite 20.59% purchase cost inflation
- PAT grew 8.49% YoY to Rs.742.98 Cr; basic EPS rose to Rs.11.40 from Rs.10.53
- EBITDA (P&L-derived) rose 14.78% YoY to Rs.1,392.96 Cr from Rs.1,213.65 Cr
- Employee cost growth moderated to 18.66% YoY from ~33% in FY26 and was flat QoQ (Rs.447.14 Cr vs Rs.451.93 Cr), indicating the wage-code step-up has largely annualised
- Total equity rose to Rs.26,098.77 Cr from Rs.24,464.04 Cr at March 2026
- Commercial paper of Rs.2,600 Cr raised at 6.12–7.18% p.a., rated ICRA A1+
Risk Factors
- EBITDA margin fell to 7.09% (−19 bps YoY, −89 bps QoQ from 7.98%); net profit margin declined to 3.78% from 4.11%
- PAT growth of 8.49% lagged revenue growth of 17.80%, with finance costs (+82.78%), D&A (+25.36%) and employee costs (+18.66%) outpacing revenue
- H1 net CFO fell 60.5% to Rs.552.57 Cr (CFO/PAT 0.34×) and FCF was negative at Rs.(1,586.61) Cr, driven by a Rs.1,387 Cr inventory build and Rs.136 Cr payables reduction
- Current borrowings rose from Rs.965.27 Cr to Rs.2,628.66 Cr; debt-equity doubled to 0.16× and interest coverage halved from 36.71× to 17.85×
- Net margin of 3.78% missed management's ~5% North Star target and revenue growth of 17.8% is below the 18–25% guided CAGR floor
- DMart Ready (Avenue E-Commerce) posted a Q2 net loss of Rs.75.35 Cr (H1: Rs.166.62 Cr); consolidated PAT was Rs.60.62 Cr below standalone PAT
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Disclaimer: This results analysis is published for educational and informational purposes only. It is not investment advice, not a recommendation to buy, sell or hold any security.