- Morgan Stanley has upgraded Avenue Supermarts to Overweight from Equal-weight
- The target price for DMart was raised to Rs 5,188 from Rs 4,552
- DMart posted 19% year-on-year revenue growth in the March quarter
Morgan Stanley has upgraded Avenue Supermarts, the operator of DMart, to Overweight from Equal-weight, signalling growing confidence in the retailer's growth outlook and resilience amid a challenging consumption environment. The brokerage has also raised its target price to Rs 5,188 from Rs 4,552, implying an upside of nearly 14%.
The upgrade comes after DMart delivered a robust 19% year-on-year revenue growth in the March quarter, underlining the company's ability to sustain strong topline momentum despite broader volatility in discretionary spending. Morgan Stanley said the performance reinforced its view that DMart remains well positioned to outperform peers, supported by scale, efficient cost control and a value-led proposition that continues to draw footfalls.
The brokerage expects DMart's growth trajectory to benefit from an acceleration in store expansion, with the company stepping up network additions over the next few years. A widening footprint should support both revenue visibility and market share gains, particularly in under-penetrated regions.
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Morgan Stanley also sees DMart as a defensive play within the discretionary space, noting that higher inflation could, counter-intuitively, work in the retailer's favour. As household budgets come under pressure, consumers may increasingly gravitate towards DMart's everyday-low-price strategy, boosting volumes even if discretionary demand elsewhere softens.
While valuations remain rich compared with some peers, the brokerage believes DMart's consistent execution, balance sheet strength and structural growth opportunities justify the premium. With improving growth visibility and macro tailwinds beginning to align, Morgan Stanley said the risk-reward has turned favourable, prompting its more constructive stance on the stock.
The upgrade places DMart back in focus for investors seeking a combination of growth stability and downside protection in an uncertain consumption landscape.
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