Synopsis: DMart shares fell about 5% after Avenue Supermarts’ Q1 revenue missed expectations despite 15% YoY growth. Slower same-store sales, fewer store additions, and rising quick-commerce competition weighed on sentiment. Brokerages gave mixed views, citing growth moderation and valuation concerns.
The shares of the large-cap company, which specializes in organized value-retailing through a chain of supermarkets and hypermarkets, are in focus as they have declined by 5 percent in the day’s trade after the mixed brokerage views after their Q1 update.
With a market capitalisation of Rs. 2,60,767.94 crores in the day’s trade, the shares of Avenue Supermarts Ltd declined upto 4.8 percent, making a low of Rs. 3,983.05 per share compared to its previous closing price of Rs. 4,187.95 per share.
What happened
Avenue Supermarts Ltd, which operates a chain of supermarkets and hypermarkets under the DMart brand, reported Q1 revenue that missed Street expectations even though it still grew 15.1% year-on-year, leading brokerages to turn cautious. Analysts gave a mixed response, with concerns around slowing growth momentum and competition, and the revenue miss was the key trigger for the overall cautious tone.
What worried analysts?
Even though revenue is growing, the pace and quality of growth raised concerns:
Slower-than-expected growth momentum:
Revenue is still rising, but the pace of growth has slowed compared to earlier quarters and analyst expectations. This suggests DMart may be entering a more mature growth phase, where sustaining high double-digit expansion becomes harder.
Same-store sales (SSSG) moderation:
Sales growth from existing stores has weakened, meaning mature outlets are not attracting higher customer spend as strongly as before. Since SSSG reflects core business strength, any slowdown signals softer underlying demand trends.
Store expansion slower than expected:
The company added fewer new stores than anticipated by brokerages, which limits overall revenue expansion. Slower rollout may impact long-term growth visibility, especially in a retail model that relies on steady geographic expansion.
Rising competition from quick commerce:
Instant delivery platforms like Blinkit, Zepto, and Instamart are capturing more urban FMCG and grocery demand. This shifts convenience-driven purchases away from DMart’s large-format, offline shopping model, especially in metro and high-frequency categories.
Brokerages’ view (Q1 FY27)
HSBC
HSBC Q1 print was weak with a clear moderation in growth compared to Q4. Standalone revenue increased 15% YoY, but it missed both consensus and HSBC estimates by around 4–5%, indicating demand softness and weaker-than-expected operating momentum across key metrics.
The brokerage maintained a Reduce rating with a target price of Rs 3,870, citing weakening operating metrics. Revenue per square foot declined 3% YoY versus 2% growth in Q4FY26, signaling pressure on productivity and suggesting continued near-term caution on valuation and earnings trajectory.
UBS
UBS noted that revenue growth of 15% YoY fell short of expectations, making Q1 a disappointing and tepid quarter overall. The slowdown versus prior momentum suggests some near-term uncertainty in execution and weaker-than-anticipated demand visibility across segments.
Despite the softer print, UBS maintained a Buy rating with a target price of Rs 5,500, though it cautioned that weaker growth could weigh on sentiment and stock performance until clearer signs of demand recovery and operational improvement emerge.
Citi
Citi highlighted that a reversal in pantry-fill demand negatively impacted same-store sales growth (SSSG), resulting in weaker quarterly performance. It also flagged ongoing margin pressures and structural risks in profitability amid evolving consumption patterns.
The brokerage maintained a Sell rating with a target price of Rs 3,650, citing expensive valuations and intensifying competition from quick-commerce players. It emphasized that sustained store expansion and improved throughput are critical for supporting future valuation re-rating.
Morgan Stanley
Morgan Stanley observed that Q1 revenue growth of 15% YoY came in below expectations following a strong Q4 performance. It also noted that growth lagged peers, many of whom reported stronger pre-quarter updates, indicating better momentum.
The brokerage maintained an Overweight stance with a target price of Rs 5,083, stating that margins remain a key monitorable. It cautioned that weaker-than-expected growth could lead to near-term stock underperformance despite longer-term optimism.
Macquarie
Macquarie described Q1 sales growth as disappointing, with both revenue expansion and store additions coming in below estimates. The brokerage also pointed to weaker execution on expansion plans and slower-than-anticipated operational scale-up during the quarter.
It maintained an Underperform rating with a target price of Rs 3,100, noting that same-store sales growth appears to have moderated from Q4 levels. This trend raises concerns about near-term growth sustainability and earnings visibility.
Goldman Sachs
Goldman Sachs noted that revenue growth slowed in Q1 despite supportive factors such as higher FMCG inflation and strong store additions in late Q4FY26. This suggests weakening underlying demand momentum and softer-than-expected operating leverage.
It maintained a Sell rating with a target price of Rs 4,000, highlighting that Q1 store additions were lower than in previous years. The brokerage sees this as a constraint on near-term growth acceleration and overall valuation support.
Financials & Others
The company’s revenue rose by 18.91 percent from Rs. 14,872 crores in Q4FY2025 to Rs. 17,684 crores in Q4FY2026. Net profit rose from Rs. 551 crores to Rs. 656 crores in the same period.
The company’s ROCE of 17.2% and ROE of 13.0% indicate decent efficiency in using its capital and shareholders’ funds to generate profits. A ROCE above ~15% is generally considered healthy, so this suggests the business is creating reasonable value from the capital it employs, though ROE is moderate rather than exceptional.
The debt-to-equity ratio of 0.10 shows very low leverage, meaning the company relies mostly on equity rather than borrowed funds, which reduces financial risk. Additionally, a median sales growth of 25.3% over the last 10 years is strong and signals consistent long-term expansion, indicating good demand and scalable operations.
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