DMart stock outlook turns cautious after Q3 results: Brokerages offer guarded calls despite margin beat

DMart (Avenue Supermarts)

• Brokerages cautious on DMart after Q3 results despite margin-led earnings beat
• Same-store growth slowed to 5.6 percent; Citi advises 'sell' on margin risks
• Jefferies and Nuvama maintain 'hold' ratings, citing limited upside

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Brokerages are largely cautious to bearish on Avenue Supermarts (DMart) after its Q3 FY26 results. Citi advised investors to ‘sell’ on slowing same-store growth and fragile margin drivers, while Jefferies and Nuvama recommend to ‘hold’ DMart shares, signalling limited upside despite an earnings beat driven by a sharp margin expansion.

DMart stock ended Friday at Rs 3,807, up 0.45 percent ahead of results, valuing the company at about Rs 2.48 lakh crore. Over the past year, the shares have gained around 8.5 percent.

Q3 snapshot: margins lift earnings, growth stays muted

For the October-December quarter, DMart reported 17 percent year-on-year growth in net profit to Rs 856 crore and 13.3 percent revenue growth to Rs 18,101 crore. EBITDA rose 20.2 percent to Rs 1,463 crore, with margins improving to 8.1 percent from 7.7 percent a year ago. However, same-store (LFL) growth slowed to 5.6 percent, a key concern across brokerages.

Citi: ‘Sell’ on growth slowdown and margin risk

Citi has a ‘Sell’ rating on DMart with a target price of Rs 3,150 per share. It said same-store growth slowed to 5.6 percent, driving 13 percent year-on-year revenue growth that came in below its estimates, with staples deflation partly weighing on revenue growth.

While it acknowledged that EBITDA and profit rose 20 percent and 18 percent year-on-year and slightly beat estimates, Citi cautioned that margin sustainability remains a risk. It argued that gross margin expansion could be a one-off, linked to FMCG discounts or lower discounting post GST changes. Citi also pointed to a pattern where profit growth lagged revenue growth in 10 of the last 12 quarters, attributing pressure to quick commerce competition and cost inflation.

Jefferies, Nuvama: ‘Hold’ calls reflect caution, not comfort

Jefferies maintained a ‘Hold’ rating with a target of Rs 4,050, acknowledging the margin-led earnings surprise but underlining moderating revenue growth and subdued LFL trends. It also pointed to execution risks around store additions and the upcoming CEO transition.

Nuvama retained a Hold with a target of Rs 4,351, saying profit growth was largely margin-driven, helped by reduced discounting. While it flagged a revival in DMart Ready growth, it tweaked FY26-27 estimates to reflect slower growth and a sharper margin focus.

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