DMart Shares Soar As Analysts Affirm Third Quarter Recovery

Brokerages have shared mixed views on Avenue Supermarts Ltd. after the company announced its third quarter business updates ahead of the earnings season. Despite differing outlooks, concerns over quick commerce competition and the pace of store additions, the stock reacted positively to the update, surging 15%. 

The DMart supermarket chain operator reported an 18% annual growth in its standalone revenue from operations to Rs 15,565.2 crore for the quarter ended December, compared to Rs 13,247.3 crore in the same period last year.  

UBS has a 'buy' rating with a target price of Rs 5,500, implying a 52.02% upside. The brokerage highlighted strong operational execution despite rising competition from quick commerce platforms, suggesting DMart’s performance in the December quarter reflects resilience and efficiency.  

Macquarie has maintained an 'underperform' rating with a target price of Rs 3,700, indicating a 2.26% upside. It noted that standalone sales growth stood at 17.5%, showing a recovery from the 14% growth reported in the previous quarter. There were 10 store additions during the quarter, in line with its estimates. Macquarie expects Ebitda margins to remain broadly flat year-on-year at 8.1%, aligning with sales growth trends.  

Citi Research maintains a 'sell' rating with a target price of Rs 3,500, implying a 3.07% upside. The brokerage believes throughput continues to be impacted by an adverse product mix, store additions in smaller towns, and increasing competitive intensity from quick commerce players.

It remains cautious on Avenue Supermarts due to risks around same-store sales growth and earnings pressure from lower throughput and product mix challenges.  

Ahead of second quarter earnings, five major brokerages—Morgan Stanley, Bernstein, Goldman Sachs, JPMorgan, and Macquarie—had highlighted slower store additions and rising competition from quick commerce platforms as key hurdles for DMart’s growth.

The company had reported slower store additions in the September quarter of fiscal 2025, but this quarter, it has added 10 new stores, aligning with Macquarie’s projections.  

Avenue Supermarts stock rose over 15% during the day to Rs 4,165.90 apiece on the NSE. The upper circuit limit was revised to 15% by the stock exchanges after the shares surged past the initial 10% limit.

It was trading 12.27% higher at Rs 4,054.05 apiece, compared to a 0.21% decline in the benchmark Nifty 50 as of 11:25 a.m. 

It has risen 4.95% in the last 12 months. The total traded volume so far in the day stood at 8 times its 30-day average. The relative strength index was at 72.90, indicating that the stock was overbought.

Nine out of the 29 analysts tracking the hypermarket chain have a 'buy' rating on the stock, nine recommend a 'hold' and 11 suggest a 'sell', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 4,415.32, implying a upside of 6.3%.