Avenue Supermarts Q2 Revenue Growth Accelerates To 18% YoY With 15 New Store Additions

Market snapshot: Avenue Supermarts delivered standalone revenue growth of 18.4% YoY for Q2FY27, supported by an improvement in like-for-like growth to 9.5% and 15 new store additions. However, operating margins experienced a 30 bps contraction to 7.3% as retailing costs per square foot rose by 3% amid entry-level wage inflation.

Data Snapshot

• Standalone revenue from operations for Q2FY27 grew 18.4% YoY to ₹19,206 crore compared to ₹16,219 crore in Q2FY26.
• Standalone EBITDA rose 14.1% YoY to ₹1,403 crore, while EBITDA margin contracted 30 bps YoY to 7.3%.
• Standalone Net Profit (PAT) increased 7.6% YoY to ₹804 crore for the quarter ended 30 September 2026.
• The company added 15 new stores during Q2FY27, taking the nationwide total to 518 stores.

What's Changed

• Top-line growth rate accelerated to 18.4% YoY in Q2FY27 from 15.1% YoY in Q1FY27.
• EBITDA margin contracted by 30 bps YoY to 7.3% in Q2FY27, reversing the 10 bps expansion seen in Q1FY27.

Key Takeaways

• Accelerating Revenue Growth: Standalone revenue expanded by 18.4% YoY, driven by like-for-like sales growth improving to 9.5%.
• Network Expansion: Opened 15 stores during the quarter, extending total operational locations to 518.
• Margin Headwinds: EBITDA margins contracted by 30 bps due to higher retailing cost per square foot and wage inflation pressures.

SAHI Perspective

Avenue Supermarts demonstrates strong core demand dynamics as store additions and improved same-store sales drive top-line momentum. While cost headwinds in employee wages and operating overheads are impacting short-term margin expansion, DMart's discount retail model continues to capture consumer footfalls effectively.

Market Implications

The robust top-line growth confirms solid consumer demand in value retail, maintaining DMart's strong competitive positioning. Near-term price movement may remain sensitive to margin trajectory as cost inflation absorbs part of the revenue gains.

Trading Signals

Market Bias: Neutral

Strong top-line revenue acceleration of 18.4% YoY is balanced by a 30 bps margin contraction to 7.3%, keeping short-term bias balanced.

Overweight: Organized Retail, Consumer Staples

Trigger Factors:

• Gross margin recovery in festival season (Q3FY27)
• Store addition trajectory in H2FY27
• Control over cost of retailing per square foot

Time Horizon: Near-term (0-3 months)

Industry Context

The Indian organized grocery retail sector is experiencing footfall recovery post-monsoon. Value retailers are aggressively expanding brick-and-mortar presence while balancing entry-level wage growth and logistics costs.

Key Risks to Watch

• Continued wage inflation impacting store-level operating costs
• Slower growth in higher-margin general merchandise and apparel segments
• Intensifying quick-commerce competition in urban pockets

Recent Developments

Avenue Supermarts reported standalone revenue of ₹18,343 crore (+15.1% YoY) and PAT of ₹936 crore (+12.8% YoY) for Q1FY27 in July 2026. ICRA reaffirmed the company's credit rating in October 2026.

Closing Insight

DMart's strong physical store expansion and volume-led growth keep its long-term market leadership secure, with operational efficiency serving as the key key monitorable for margin recovery.

High Performance Trading with SAHI.