Buy Avenue Supermarts; target of Rs 4600: Motilal Oswal

Motilal Oswal is bullish on Avenue Supermarts recommended buy rating on the stock with a target price of Rs 4600 in its research report dated January 11, 2026.

Broker Research

January 12, 2026 / 11:36 IST

Buy

Motilal Oswal's research report on Avenue Supermarts

Avenue Supermarts (DMART) delivered a strong beat on profitability in 3QFY26, driven primarily by gross margin (GM) expansion. GM expanded 50bp YoY to 14.6% (~60bp beat) in 3Q, likely driven by GST reduction benefits (lower discounting) and a favorable category mix (higher GM&A and FMCG share at the expense of the lower-margin Food category). Further, after several quarters of elevated cost of retailing (CoR), DMART reported a stable CoR per sqft in 3Q, driving 50bp EBITDA margin expansion to 8.4% (~80bp beat) and a 20% YoY standalone EBITDA growth (11% beat). While margin performance was encouraging, revenue growth moderated to ~13% YoY, largely driven by ~14% store area addition, as like-for-like (LFL) growth moderated to 5.6% (vs. 6.8% in 2Q and 8.3% YoY). DMART added 10 stores in 3QFY26 (~27 in 9MFY26 vs. 22 YoY). The acceleration in the pace of store additions remains the primary growth driver for DMART. We continue to build in 60 store additions in FY26.

Outlook

We assign a ~43x FY28 EV/EBITDA multiple (implying ~79x FY28 P/E) to arrive at our revised TP of INR4,600. We reiterate our BUY on DMART.

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