Brokerages turned cautious on Avenue Supermarts Ltd. after the DMart operator reported weaker-than-expected revenue growth in its June quarter business update, with several analysts citing slowing growth momentum, moderating same-store sales and increasing competitive pressures.
The retailer reported standalone revenue of Rs 18,343 crore for the first quarter of FY27, up 15.1% year-on-year, but below Street estimates. The company ended the quarter with 503 stores, including one outlet in Navi Mumbai that remains closed for reconstruction.
HSBC, which maintains a 'Reduce' rating with a target price of Rs 3,870, said the quarter was weaker than expected, with revenue missing both consensus and its own estimates. Morgan Stanley expects the weaker performance to weigh on the stock in the near term and said margins will be the key monitorable when detailed earnings are announced.
Macquarie retained its 'Underperform' rating, pointing to disappointing sales growth, lower-than-expected store additions and moderation in same-store sales growth. Goldman Sachs also maintained a 'Sell' rating, noting that revenue growth slowed despite higher FMCG inflation and recent store additions.
Among the relatively positive views, UBS retained its 'Buy' rating but termed the quarter "tepid", warning that the weaker-than-expected growth could pressure the stock. Citi, meanwhile, reiterated its 'Sell' rating, citing expensive valuations, risks to same-store sales growth and increasing competition from quick-commerce platforms as key concerns.
ALSO READ: Avenue Supermart Q1 Results: Check Date, Fundraise And Share Price History Details
Brokerages on Avenue Supermarts (DMart)
HSBC
- Maintain Reduce; Target Price: Rs 3,870.
- Q1 was a weak print, with growth moderating from Q4.
- Standalone revenue rose 15% YoY, missing both consensus and HSBC estimates by 4-5%.
- Revenue per square foot declined 3% YoY, versus 2% growth in Q4FY26.
UBS
- Maintain Buy; Target Price: Rs 5,500.
- Revenue growth of 15% YoY disappointed and could weigh on the stock.
- Overall, Q1 was a tepid quarter.
Citi
- Maintain Sell; Target Price: Rs 3,650.
- Pantry-fill reversal weighed on same-store sales growth (SSSG), while margin risks remain.
- Remains cautious due to expensive valuations and rising quick-commerce competition.
- Sustained store expansion and improved throughput will be key to supporting valuation multiples.
Morgan Stanley
- Maintain Overweight; Target Price: Rs 5,083.
- Q1 revenue growth of 15% YoY was below expectations following a strong Q4.
- Growth lagged peers, whose pre-quarter updates indicated sustained momentum.
- Weaker-than-expected growth could lead to near-term underperformance.
- Margins will be the key monitorable in the earnings.
Macquarie
- Maintain Underperform; Target Price: Rs 3,100.
- Q1 sales growth was disappointing.
- Both sales growth and store additions were below estimates.
- Believes same-store sales growth moderated from Q4 levels.
Goldman Sachs
- Maintain Sell; Target Price: Rs 4,000.
- Revenue growth slowed in Q1 despite higher FMCG inflation and a strong store addition in late Q4FY26.
- Store additions in Q1 were lower than in previous years.
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