Avenue Supermarts (DMart) drew diverse reactions from global brokerages after its Q2 results, with views ranging from high conviction 'Outperform' to continued 'Sell' ratings. Analysts remain split on whether slowing same-store growth signals a structural moderation or just near-term softness.
Why Are Brokerages Divided on Avenue Supermarts After Q2 Results?
Macquarie retained its ‘Underperform’ rating with a target price of ₹3,100, flagging moderation in same-store sales and a continued decline in net cash levels. The brokerage believes capital efficiency remains under pressure amid ongoing expansion.
How Does UBS View Avenue Supermarts’ Growth Story? UBS maintained its ‘Buy’ rating, trimming its target price slightly to ₹5,500 from ₹5,600. It noted that EBITDA growth still trails revenue growth but the gap has narrowed to 2%. UBS believes Avenue Supermarts remains one of India’s best consumer compounders and expects the current weakness to be short-lived.
For traders evaluating FMCG and retail counters post-earnings, explore guided analysis via Nifty Tip Today and BankNifty Today Tip updates.
What Are Citi’s Concerns on Avenue Supermarts? Citi retained its ‘Sell’ rating with a target price of ₹3,250, citing subdued profitability. EBITDA and PAT rose 11% and 5% YoY but came in below estimates. Same-store sales growth slowed to 6.8% from 7.1% in Q1FY26. Revenue per sq. ft. rose 1.3% YoY, while profitability metrics per sq. ft. declined.
CLSA maintained its high conviction ‘Outperform’ call with a target of ₹6,300, despite below-consensus results. It attributed weaker sales to weather conditions and private-label price deflation. Employee costs jumped 33% YoY, driving a 4.6% EBITDA miss as DMart builds staff strength for rapid expansion. Store additions, however, showed positive traction with like-for-like growth of 6.8%.
Which Factors Could Shape DMart’s Trajectory Ahead? Margin pressures and inflation-driven cost challenges continue, but DMart’s aggressive store rollouts and improving operational efficiency could balance sentiment. Analysts believe scalability remains intact, though cash flow management and private-label momentum will be key monitorables in the next two quarters.
For detailed portfolio advisory and sectoral rotation guidance, access SEBI-registered insights through Nifty Tip
As Avenue Supermarts navigates an evolving consumption landscape, the balance between expansion-driven growth and capital discipline will determine if the company can justify its premium valuations.
Investor Takeaway: Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that while valuation divergence persists across brokerages, DMart’s long-term story remains strong if store economics normalize and operating leverage improves in FY26–27.
Related Queries
Why Are Brokerages Split on Avenue Supermarts After Q2FY26?
How Will Slower Same-Store Growth Affect DMart’s Valuations?
What Are the Key Triggers for Avenue Supermarts in FY26?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment adviser before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
