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Avenue Supermarts shares tumble nearly 10% post Q3 earnings

Business Finance

Press Trust of India  |  New Delhi 

Shares of Avenue Supermarts, which runs the D-Mart supermarket chain, slumped nearly 10 per cent Monday after its December 2018 quarter earnings failed to cheer investors.

The scrip cracked 9.48 per cent to Rs 1,420.20 on BSE.

On NSE, shares of the company tumbled 9.90 per cent to Rs 1,416.

Avenue Supermarts Saturday posted 2.1 per cent jump in its net profit to Rs 257 crore for the December 2018 quarter.

The company had reported a net profit of Rs 252 crore in the corresponding quarter a year ago, it said in a BSE filing.

According to JM Financial Institutional Securities, 3QFY19 turned out to be another disappointing quarter for DMart.

While the gross margin impact of its now-known strategy of driving higher throughout its stores by lowering prices across categories has been built into forecasts, the disappointment this time round was led by a surprisingly sharp surge in other expenses' (45 per cent), it said.

"DMart's other expenses have rarely grown at a significantly faster clip versus sales growth in the past," it added.

The company's revenue from operations in the quarter under review stood at Rs 5,451 crore, up 33.2 per cent, as against Rs 4,094 crore in the year-ago period.

Avenue Supermarts' CEO and Managing Director Neville Noronha said the company's topline continued to grow well, even though profit after tax (PAT) growth remained flat vis-a-vis the corresponding quarter last year, primarily due to gross margin reduction on account of price cuts.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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First Published: Mon, January 14 2019. 12:35 IST