DMart Margin Recovery Spurs Target Price Upgrade; Store Expansion Key Trigger, Says Motilal Oswal

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Motilal Oswal Report

Motilal Oswal has reiterated its Buy rating on Avenue Supermarts Ltd. following a margin recovery after several quarters. While the brokerage notes that increased pricing competition from quick commerce could pose near-term challenges to margin sustainability, it remains confident in DMART’s long-term competitiveness, citing its value-focused model and superior store economics.

The key growth driver continues to be store expansion, with an estimated ~60 new stores in FY26. Motilal Oswal has raised its FY26–28 Ebitda and PAT estimates by 3–5%, primarily on account of higher gross margins.

The brokerage projects a CAGR of 16% in revenue, 16% in Enbitda, and 12% in PAT over FY25–28E, supported by a 15% CAGR in store additions and ~6% like-for-like growth.

Assigning a 43x FY28 EV/Ebitda multiple (implying ~79x FY28 P/E), Motilal Oswal has revised its target price to Rs 4,600 (earlier Rs 4,300).

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