<p>Shares of India's Avenue Supermarts Ltd, which operates the D-Mart retail chain, fell to a six-month low on Monday after reporting a contraction in core quarterly profit margins due to weak discretionary demand.</p>.<p>The company said its earnings margin before interest, taxes, depreciation, and amortisation fell to 8.34 per cent in the third quarter from 9.39 per cent a year earlier.</p>.<p>Multiple brokerages cited weakness in Avenue's general merchandise and apparel (GM&A) category as consumers still reeling from the impact of the high cost of living scaled-back spending.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/business-news/d-mart-q3-profit-rises-67-to-rs-589-crore-sales-up-255-1181054.html">D-Mart Q3 profit rises 6.7% to Rs 589 crore, sales up 25.5%</a></strong></p>.<p>D-Mart, known for regular discounts on everything from pulses to clothes, has seen its discretionary, or non-essential unit "surprisingly impacted" by high inflation, brokerage Prabhudas Lilladher said.</p>.<p>That led to the category's contribution to sales below pre-Covid levels even as the country rebounded from pandemic lows, several analysts wrote in their notes.</p>.<p>GM&A is the highest margin category for Avenue, clocking over 20 per cent, Centrum Institutional Research estimated.</p>.<p>"Sales per square feet and gross margins will improve once the full recovery in GM&A happens," the brokerage wrote in a note.</p>.<p>Kotak Institutional Equities analysts said a standalone net profit of around 6.4 billion rupees ($78.73 million) was 9 per cent short of the brokerage's estimates even as foods and packaged goods sales drove a 9.4 per cent increase in consolidated quarterly profit.</p>.<p>Still, Avenue could book sales benefits in the long run as consumers feeling the inflation pinch increasingly prefer discounted goods, analysts said.</p>.<p>The current average rating of 26 brokerages on the stock is "hold," with a median price target of 4,050 rupees, according to Refinitiv data.</p>.<p>Avenue's shares, which had in 2022 recorded their first annual decline, slipped as much as 5.7 per cent to 3,645.20 rupees on Monday.</p>.<p>($1 = 81.2950 Indian rupees)</p>
<p>Shares of India's Avenue Supermarts Ltd, which operates the D-Mart retail chain, fell to a six-month low on Monday after reporting a contraction in core quarterly profit margins due to weak discretionary demand.</p>.<p>The company said its earnings margin before interest, taxes, depreciation, and amortisation fell to 8.34 per cent in the third quarter from 9.39 per cent a year earlier.</p>.<p>Multiple brokerages cited weakness in Avenue's general merchandise and apparel (GM&A) category as consumers still reeling from the impact of the high cost of living scaled-back spending.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/business-news/d-mart-q3-profit-rises-67-to-rs-589-crore-sales-up-255-1181054.html">D-Mart Q3 profit rises 6.7% to Rs 589 crore, sales up 25.5%</a></strong></p>.<p>D-Mart, known for regular discounts on everything from pulses to clothes, has seen its discretionary, or non-essential unit "surprisingly impacted" by high inflation, brokerage Prabhudas Lilladher said.</p>.<p>That led to the category's contribution to sales below pre-Covid levels even as the country rebounded from pandemic lows, several analysts wrote in their notes.</p>.<p>GM&A is the highest margin category for Avenue, clocking over 20 per cent, Centrum Institutional Research estimated.</p>.<p>"Sales per square feet and gross margins will improve once the full recovery in GM&A happens," the brokerage wrote in a note.</p>.<p>Kotak Institutional Equities analysts said a standalone net profit of around 6.4 billion rupees ($78.73 million) was 9 per cent short of the brokerage's estimates even as foods and packaged goods sales drove a 9.4 per cent increase in consolidated quarterly profit.</p>.<p>Still, Avenue could book sales benefits in the long run as consumers feeling the inflation pinch increasingly prefer discounted goods, analysts said.</p>.<p>The current average rating of 26 brokerages on the stock is "hold," with a median price target of 4,050 rupees, according to Refinitiv data.</p>.<p>Avenue's shares, which had in 2022 recorded their first annual decline, slipped as much as 5.7 per cent to 3,645.20 rupees on Monday.</p>.<p>($1 = 81.2950 Indian rupees)</p>