DMart shares fall 2.8% after Q2 earnings; brokerages flag margin pressure, mixed outlook on online biz

Shares of Avenue Supermarts Ltd, operator of the DMart retail chain, fell 2.8 percent to end at Rs 4,199.9 on Monday after the company’s Q2 FY26 results drew mixed reactions from brokerages. While analysts noted stabilisation in gross margins, they flagged rising operating expenses, slower same-store growth, and the scaling back of its online venture DMart Ready.

Intraday, the DMart stock fell to a low of 4,192.1 on the NSE, down 3% from the previous close of Rs 4,320.4.

DMart Q2 results snapshot

Avenue Supermarts (DMart) reported a muted 3.8 percent year-on-year rise in consolidated net profit to Rs 684.85 crore for the July-September quarter, as higher employee and finance costs weighed on margins. Revenue from operations rose 15.4 percent to Rs 16,676 crore, while EBITDA margins narrowed to 7.28 percent from 7.57 percent a year earlier.

Store additions improved during the quarter, with eight new outlets taking the total count to 432. Like-for-like growth from stores older than two years stood at 6.8 percent.

DMart Ready, the company’s e-commerce arm, exited five cities during the quarter and now operates in 19 locations across India.

Analyst views on DMart Q2 results

Brokerages offered differing assessments of the results:

• HSBC has a Reduce rating on DMart stock with a target price of Rs 3,700 per share, saying that while gross margin decline has stabilised, elevated operating expenses remain a concern. It highlighted moderation in like-for-like growth and rising competition.
• Morgan Stanley has an Equal-weight call with a target price of Rs 4,552, noting that revenue, EBITDA, and PAT grew 15, 11, and 4 percent YoY, respectively, but were below its estimates.
• CLSA has a High Conviction Outperform call with a target of Rs 6,300, pointing to continued store expansion and steady same-store sales despite weaker sales from new stores and higher staff costs.

While CLSA remains bullish on DMart’s long-term expansion, HSBC and Morgan Stanley expressed caution over the near-term cost structure and slower growth momentum.

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