Hold Avenue Supermarts; target of Rs 4111: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Avenue Supermarts with a target price of Rs 4111 in its research report dated October 12, 2025.

Broker Research

October 13, 2025 / 11:36 IST

hold

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Avenue Supermarts

We cut our FY27/FY28 EPS estimates by 3.3%/3.2, respectively, as we expect margin pressures to persist due to 1) sustained tepid store metrics with bills/store/day/, ABV & Sales/sqft growing by -0.3%/1.2%/1.3% in 2Q 2) Continued high competitive intensity driven by a consumer shift toward ecommerce and quick commerce platforms and 3) higher cost of retail as rising overheads and store-level wages continue to weigh on margins. D’Mart’s Q2 earnings missed estimates, as higher operating expenses weighed on margins. The cost of retail increased by 50bps on higher manpower costs and overheads. GMA proportion remained stable YoY with 23.3% contribution in 1H26 vs 23.5% in 1H25. D’Mart might continue to see competition from Ecom/ QC in non-apparel GMA as they are trying to increase their presence in higher margin non-grocery segments. D’Mart Ready exit from 5 cities and 10 new fulfilment centers shows need to compress delivery timelines as QC is really reducing the price differential in products.

Outlook

We estimate 7.8% EPS growth in FY26 and 14.5% CAGR over FY26-28. We expect back-ended returns given rich valuations of 73.6xFY28E EPS. Maintain Hold.

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