Reduce Avenue Supermarts; target of Rs 4550: Dolat Capital Market

reduce

Dolat Capital Market's research report on Avenue Supermarts

Dmart’s Q2FY26 results were in line and soft. Standalone Rev/GP/ EBITDA/APAT came in at 15.4/15.9/11.3/5.1% YoY. We believe Rev was impacted by monsoons, store cannibalization, shift to Qcom and price deflation. Earnings growth remains modest at ~3.5% in H1FY26 and ~9% over FY23–25; however, strong fundamentals, steady store expansion, potential for improving category mix, and margin recovery on a favourable base support a healthy Revenue/EPS CAGR of ~14/16% over FY25-28. The ramp-up of Dmart Ready offers a further growth trigger. Qcom-driven competition may weigh in the near term.

Outlook

We trim our FY26/27E APAT by 5/6% to factor weak rev growth and reiterate to ‘Reduce’ rating with revised TP of Rs 4,550 (incl. Rs 250 for Dmart Ready), rolling over to FY28 valuation at 65x standalone EPS (earlier Rs 4,065 @ 65x FY27). Our rating reflects near-term weak performance, competition from Qcom and rich valuations; bias remains positive.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Avenue Supermarts - 13102025 - dolat