DMart shares fall 3% despite positive Q4 business updates: Here's why

DMart

The shares of DMart-parent Avenue Supermarts fell nearly 3 percent on April 4, snapping their two-day gaining streak. The shares of the retail giant were trading at nearly Rs 4,039 apiece in the afternoon.

This, despite the RK Damani-backed company issuing positive updates about its performance in the January-March quarter of FY25. DMart reported a 16.7 percent rise in its standalone revenue from operations at Rs 14,462 crore in Q4 FY25. The retail major also said that it added 28 new stores during the quarter, its highest quarterly net store additions ever during Q4 FY25, to bring the total store count to 415.

The fall in the share price of the retail giant despite the positive Q4 updates comes after analysts issued cautious outlooks for the stock.

Citi Research maintained its 'Sell' rating on the stock, with a target price of Rs 3,350 per share. The target price implies a downside potential of over 19 percent from the stock's previous closing price of Rs 4,158 per share.

In its latest note accessed by CNBC-TV18, the international brokerage noted that the company's performance continues to be impacted by unfavorable product mix, amid a slowdown in discretionary consumption. Moreover, store additions in smaller towns and rising competition from quick commerce players further add pressures.

Citi also remains cautious over the high P/E multiple at which the stock currently trades. As per data on NSE, the stock has an adjusted P/E ratio of 99.48.

Morgan Stanley, meanwhile, kept an 'Underweight' rating on DMart shares, with a target price of Rs 3,260 apiece. This implies a downside potential of nearly 22 percent from the stock's previous closing price.

The international brokerage noted that the five-year CAGR of 18.5 percent was lower than the average of 20 percent recorded in FY24.