DMart shares fall over 4% after Q1 earnings

Avenue Supermarts (DMART) Ltd shares fell more than 4 per cent on Monday after the DMart operator reported its June quarter results and announced plans to raise up to ₹1,000 crore through non-convertible debentures (NCDs). The stock traded at ₹3,988.20 on the NSE at 12.10 pm after hitting an intraday low of ₹3,908, compared with the previous close of ₹4,081.10.

The company reported a 12.8 per cent y-o-y rise in standalone profit after tax (PAT) to ₹936 crore for the quarter ended June 30, 2026.

Domestic brokerage Elara Capital initiated coverage with an accumulate rating and a target price of ₹4,700. The brokerage said it expects revenue CAGR of 18.1 per cent and PAT CAGR of around 18 per cent during FY26-FY29, led by store addition CAGR of around 16 per cent and like-for-like growth of around 7 per cent. Elara Capital expects EBITDA margins to remain stable at around 7.6-7.7 per cent during FY26-FY29 and said risks include weaker like-for-like growth, margin pressure from rising quick commerce competition and pricing intensity.

Global brokerage Morgan Stanley maintained its overweight rating with a target price of ₹5,083. The brokerage said Q1 margins were broadly in line with expectations, but a recovery in revenue growth remains the key trigger for the stock. It noted that management commentary pointed to rising quick commerce competition in metro markets and said weak top-line growth could limit near-term upside. Morgan Stanley added that it continues to like the stock because of its large addressable market and strong business model, while awaiting further commentary from management at the annual investor meeting, typically held in July or August.

Bernstein reiterated its outperform rating with a target price of ₹5,000, saying the Q1 results demonstrated the resilience of the DMart business model despite the quick commerce onslaught. The brokerage said averaging Q4 and Q1 performance provides a better picture of the company’s underlying momentum. It expects store additions to remain above 80 annually, although partly funded through debt, and said the company’s ability to sustain gross margins alongside positive same-store sales growth despite competition was encouraging. Bernstein also expects the cost curve to become more supportive over the next two to three quarters and said DMart Ready remains a distraction rather than a differentiator.

Citi maintained its sell rating and cut its target price to ₹3,400 from ₹3,650. The brokerage said metro same-store sales growth has stalled as quick commerce pressure intensifies. It noted that profit growth has trailed revenue growth in 10 of the last 13 quarters due to rising quick commerce competition, lower other income and higher interest costs. Citi also cut its FY27-FY29 revenue estimates by 4-6 per cent and EPS estimates by 5-7 per cent, adding that the current risk-reward remains unfavourable.

Goldman Sachs maintained its sell rating with a target price of ₹4,000. The brokerage said revenue growth slowed despite a large number of store openings towards the end of the March quarter and higher FMCG inflation. It highlighted flat y-o-y growth in metro markets, likely due to increasing quick commerce competition, while EBITDA margins remained largely flat as higher operating costs offset gross margin expansion.

PL Capital maintained a hold rating with a negative bias and a target price of ₹4,103. The brokerage said rising competition from quick commerce is likely to limit growth across modern trade and DMart Ready. It noted that DMart Ready has exited 14 cities in the last 15 months and is now confined to 11 cities with a focus on larger towns. PL Capital estimated that the company’s debt level increased from ₹11 billion to around ₹25 billion y-o-y in the June quarter and expects store additions to remain elevated at around 75 each in FY27 and FY28.