Avenue Supermart: Brokerages impressed by Q4FY24 results, paint strong growth picture

Avenue Supermarts reported growth on all three key parameters in Q4.

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26 Aug, 2025 12:21

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Avenue Supermarts, operator of retail chain D-Mart, reported a healthy set of earnings for Q4FY24, growing on three key parameters -- profit, revenue and profitability.

Buoyed by this, brokerages signaled a positive outlook for the D-Mart operator, forecasting a promising growth trajectory hereon.

In addition, the management also hinted at an increasing share of GM&A into its mix, which, according to Nuvama Institutional Equities, is a major positive.

JPMorgan also saw this improvement in a positive light, as it believes that the underperformance from the apparel segment is now behind. The foreign brokerage also sees a favourable risk-reward ratio for Avenue Supermarts, with a view that the business is set up well for acceleration.

Confident of the D-Mart operator's future growth trajectory, JPMorgan upgraded the stock to an 'overweight' call while raising its price target to Rs 5,400 .

The brokerage premised its upgrade on the confidence that D-Mart will likely deliver revenue growth in the high teens over the medium term. The company's ability to ensure offerings at the lowest prices is another big positive, giving it a key competitive advantage over peers, JPMorgan highlighted.

Moreover, the brokerage sees margin tailwinds for Avenue Supermarts, emerging from the benefits of scale expansion, premiumisation, better mix and strong cost focus. Factoring all these in, JPMorgan raised its FY25-26 EPS for Avenue Supermarts by 3-6 percent.

Like JPMorgan, Nuvama also remains impressed by the addition of 24 new D-Mart stores in Q4FY24 which takes the total tally to 365 . This, according to Nuvama, breaks the slow store addition trajectory visible in the first three quarters of FY24.

Going ahead, the brokerage pegs an addition of 85 more stores by FY26, which, along with a pickup in the share of GM&A in the mix, is expected to aid the company's margins.

"Factoring in this robust addition and runway for similar addition in coming years, we increase the earnings multiple to the pre-COVID average of 75x PE (earlier 70x)," Nuvama stated in its note.

The brokerage also raised its price target for the stock by around 18 percent to Rs 4,821, but retained its 'hold' call, largely due to the sharp run-up in the scrip in recent months.

On the other hand, it is the recovery in Avenue Supermarts' revenue/sq ft and the reducing gap between revenue/store and revenue/sq ft that impressed Motilal Oswal Financial Services the most.  According to the brokerage, this implied that the share of large-format stores improved,

which is a positive factor.

"This, along with the moderating inflation and the onset of the festive season, may help revive discretionary demand and consequently improve the SSSG (Same Store Sales Growth) trend," MOFSL stated.

Maintaining a positive outlook, MOFSL also held to its 'buy' rating for the stock with a price target of Rs 5,310.

Marking a contrast from the consensus, Goldman Sachs sees store addition for Avenue Supermarts to be similar to that in the previous fiscal, with the focus largely on existing states.

The brokerage continued to keep a 'sell' call on the stock with a bearish price target of Rs 3,900. However, it did note that Q4 profit growth for Avenue Supermarts finally matched revenue growth.

The company's consolidated net profit grew 22.5 percent on-year to Rs 563 crore for the quarter. Revenue rose to Rs 12,726.6 crore --  up 20 percent from Rs 10,594 crore in the year-ago period. The top line was aided by area addition and productivity growth.

Moreover, an improvement in the mix of general merchandise and apparel (GM&A) helped expand gross margin by 30 basis points on-year to 13.7 percent.

At 09.50 am on May 6, shares of Avenue Supermarts were trading 0.6 percent higher at Rs 4,644.10 on the NSE.