Shares of Avenue Supermarts, which operates DMart retail chain, fell 2.6% on NSE to a day’s low of Rs 3,958 on Monday, after the company reported a 2% year-on-year (YoY) rise in standalone net profit to Rs 830 crore for the first quarter of FY26, compared to Rs 812 crore in the year-ago period.
Revenue from operations rose 16% YoY to Rs 15,932 crore.
During the quarter, the company opened nine new stores, taking its total count to 424 as of June-end.
The company said revenue growth remained strong, but margin and cost pressures persisted. One of the key factors was high deflation in staple food and non-food items, which impacted sales growth by about 100–150 basis points. The highly competitive FMCG segment also weighed on margins.
Standalone EBITDA came in at Rs 1,313 crore, up from Rs 1,221 crore in the same quarter last year. However, EBITDA margin dropped to 8.2% from 8.9% a year ago. On a consolidated basis, EBITDA stood at Rs 1,299 crore with a margin of 7.9%, down from 8.7% in Q1FY25.
CEO and MD Neville Noronha said older stores (two years and above) recorded 7.1% growth in the quarter. Operating costs rose due to increased investments in service levels, capacity building, and inflation in entry-level wages. Gross margin also declined year-on-year due to continued pricing pressure in the FMCG segment.
Nuvama
Nuvama has maintained a Hold rating on Avenue Supermarts with a revised target price of Rs 4,086. The brokerage expects margin pressures to persist due to competitive intensity and has cut its FY26E and FY27E PAT estimates by around 6% and 8%, respectively. With a roll-forward to Q1FY28 PAT, the target has been revised downward from Rs 4,273 to Rs 4,086.
Motilal Oswal (MOSL)
Motilal Oswal has maintained a Buy rating with a target price of Rs 4,500. It noted that Q1FY26 EBITDA grew just 8% YoY—5% below estimates—due to a 25 basis point decline in gross margins and a 9% YoY increase in retail costs per square foot. Revenue rose 16% YoY, largely driven by 14% store expansion, though like-for-like growth slowed to 7.1% amid deflation. The company added nine stores during the quarter, up from six a year ago.
MOSL also highlighted that elevated operating costs stem from efforts to improve service levels, build capacity, and manage wage inflation. Rising competition from quick commerce players could pressure near-term growth and margins, but strong store-level economics are expected to support long-term competitiveness.
The brokerage cut its FY26–28E EBITDA estimates by 2–3% and EPS by 5–6% due to rising costs and higher finance expenses. It expects a compound annual growth rate (CAGR) of 18% in revenue, 17% in EBITDA, and 15% in PAT over FY25–28.
Revenue from operations rose 16% YoY to Rs 15,932 crore.
During the quarter, the company opened nine new stores, taking its total count to 424 as of June-end.
The company said revenue growth remained strong, but margin and cost pressures persisted. One of the key factors was high deflation in staple food and non-food items, which impacted sales growth by about 100–150 basis points. The highly competitive FMCG segment also weighed on margins.
Standalone EBITDA came in at Rs 1,313 crore, up from Rs 1,221 crore in the same quarter last year. However, EBITDA margin dropped to 8.2% from 8.9% a year ago. On a consolidated basis, EBITDA stood at Rs 1,299 crore with a margin of 7.9%, down from 8.7% in Q1FY25.
CEO and MD Neville Noronha said older stores (two years and above) recorded 7.1% growth in the quarter. Operating costs rose due to increased investments in service levels, capacity building, and inflation in entry-level wages. Gross margin also declined year-on-year due to continued pricing pressure in the FMCG segment.
Should you buy, sell, or hold DMart shares? Here’s what analysts say
Nuvama
Nuvama has maintained a Hold rating on Avenue Supermarts with a revised target price of Rs 4,086. The brokerage expects margin pressures to persist due to competitive intensity and has cut its FY26E and FY27E PAT estimates by around 6% and 8%, respectively. With a roll-forward to Q1FY28 PAT, the target has been revised downward from Rs 4,273 to Rs 4,086.
Motilal Oswal (MOSL)
Motilal Oswal has maintained a Buy rating with a target price of Rs 4,500. It noted that Q1FY26 EBITDA grew just 8% YoY—5% below estimates—due to a 25 basis point decline in gross margins and a 9% YoY increase in retail costs per square foot. Revenue rose 16% YoY, largely driven by 14% store expansion, though like-for-like growth slowed to 7.1% amid deflation. The company added nine stores during the quarter, up from six a year ago.
MOSL also highlighted that elevated operating costs stem from efforts to improve service levels, build capacity, and manage wage inflation. Rising competition from quick commerce players could pressure near-term growth and margins, but strong store-level economics are expected to support long-term competitiveness.
The brokerage cut its FY26–28E EBITDA estimates by 2–3% and EPS by 5–6% due to rising costs and higher finance expenses. It expects a compound annual growth rate (CAGR) of 18% in revenue, 17% in EBITDA, and 15% in PAT over FY25–28.
