Avenue Supermarts Ltd., the operator of DMart, gets mixed views, with Goldman Sachs, Morgan Stanley and Macquarie all lowering their target prices after the company's investor meet, even as they differed on its long-term investment case.
The key takeaway across brokerages was that DMart's growth trajectory is likely to be slower than previously expected, with management guiding for around 15% annual store growth — equivalent to roughly 75 new stores in FY27. That is below market expectations and has prompted analysts to revisit their forecasts.
Goldman Sachs retained its 'Sell' rating while cutting its target price to Rs 3,800 from Rs 4,000. The brokerage said the company's store expansion ambitions are now lower than expected, although management's willingness to sign long-term leases could improve execution over time.
Goldman also believes like-for-like sales growth (LFL) is unlikely to accelerate meaningfully despite higher FMCG inflation, suggesting underlying demand remains subdued. While it expects gross margins to remain stable at 14-15%, it believes profit-before-tax margins will become a more relevant measure of profitability going forward. The brokerage also noted that DMart has effectively ruled out competing in quick commerce, choosing instead to grow DMart Ready in a disciplined and profitable manner.
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Morgan Stanley maintained its 'Overweight' recommendation but lowered its target price to Rs 4,464 from Rs 4,827. The brokerage cut its FY27 store opening estimate to 75 stores from 85 and reduced its same-store sales growth forecast to 7% from 8%. As a result, it trimmed earnings-per-share estimates for FY27-FY29 by around 3%, citing lower revenue expectations and higher finance costs.
Macquarie remained the most cautious, reiterating its 'Underperform' rating with a Rs 3,250 target price. While it expects store additions of around 15% annually and same-store sales growth of roughly 8%, it remains unconvinced by the company's long-term positioning in online grocery.
The brokerage noted that management continues to prioritise DMart Ready over quick commerce and believes online and offline customers have different shopping behaviours. As a result, the company sees little merit in integrating its physical stores with its digital platform.
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