Avenue Supermarts (DMart) remained under the spotlight after its Q1 FY27 performance, with brokerages offering mixed views. While margins improved due to a better product mix, slower same-store sales growth and increasing competition from quick commerce platforms continue to weigh on sentiment.

Most analysts agree that DMart's expansion into non-metro markets remains a bright spot, while metro stores face mounting competitive pressure from rapid-delivery platforms.

Elara Capital

• Rating: Accumulate
• Target Price: ₹4,700
• Q1 revenue growth was marginally below expectations.
• Metro same-store sales remained flat.
• Non-metro stores delivered healthy 14–15% growth.
• Gross margin expanded by 46 basis points.
• DMart Ready operations have been streamlined to 11 cities.
• FMCG price hikes and store additions could support future growth.

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JPMorgan

• Rating: Neutral
• Target Price: ₹4,250 (Reduced)
• EBITDA margins remained stable.
• Gross margin improved by approximately 50 basis points.
• Like-for-like sales growth slowed to 5.5%.
• Metro stores remained weak due to quick commerce competition.
• Non-metro expansion continues to perform well.

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Goldman Sachs

• Rating: Sell
• Target Price: ₹4,000
• Revenue growth moderated despite new store additions.
• Metro business remained flat.
• Higher depreciation and interest costs impacted profit growth.
• Operating cost increases offset gross margin gains.

• Quick Commerce Competition: Fast-delivery platforms are increasingly affecting customer traffic at metro stores.
• Non-Metro Expansion: Smaller cities continue to deliver stronger growth than metropolitan markets.
• Margin Improvement: Better product mix helped gross margins expand despite slower sales growth.
• Store Expansion: Continued rollout of new stores remains a long-term growth driver.
• DMart Ready: The online grocery business is being focused on fewer, larger cities to improve operational efficiency.

• Gross margin expansion.
• Healthy growth in non-metro stores.
• Steady pace of store additions.
• Potential benefit from FMCG price increases.
• Strong long-term brand positioning.

• Rapid growth of quick commerce players.
• Weak same-store sales growth in metro markets.
• Higher operating expenses.
• Slower-than-expected consumer demand.
• Premium valuation compared with peers.

Investor Takeaway

Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that DMart's long-term investment case remains supported by disciplined execution, store expansion and operational efficiency. However, the retail landscape is changing rapidly, with quick commerce emerging as a structural challenge, particularly in large cities. Future performance will depend on the company's ability to balance physical store growth with evolving consumer shopping habits while protecting profitability.

Disclaimer: This article is for educational purposes only and summarizes brokerage opinions. Ratings and target prices may change without notice. Investors should conduct their own research before making investment decisions.

Read free investing insights at Indian-Share-Tips.com, a SEBI Registered Advisory Services.

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