Dmart stock to hit margin roadblock: Low footfall, high cost to dent profit

Despite the lockdown its March quarter performance was better than expected

Avenue Supermarts (DMart) has been one of the biggest gainers among retail firms since the beginning of the lockdown, appreciating 33 per cent. The company’s ability to achieve higher-than-industry growth, margins, and return ratios, coupled with a strong balance sheet have aided stock gains. The firm had raised Rs 4,000 crore in the March quarter (Q4) from a qualified institutional placement, which boosted its cash position.

Despite the lockdown, its Q4 performance was better than expected. The firm reported a 23 per cent revenue growth year-on-year (YoY) in the quarter, pegged by a nine-day loss in March. Given the 11