Gross margins narrowed to 15.3% from 15.6%. EBITDA grew 6.4% to ₹1,299 crore from ₹1,221 crore, while EBITDA margins slipped to 7.9% from 8.7%.
Brokerages have offered mixed views, citing margin pressure and rising competition.Morgan Stanley has maintained an ‘Underweight’ rating on Avenue Supermarts, with a price target of ₹3,350 per share.
The brokerage said that Q1 earnings missed consensus estimates on both revenue and margins, and said higher competitive intensity, coupled with the company’s continued investments to counter competition and build capabilities, will likely weigh on performance.
It also believes the latest results and commentary add to the ongoing de-rating in the stock.
HSBC also holds a ‘Reduce’ rating, with a price target of ₹3,600. It flagged that Q1FY26 EBITDA and margins were slightly below already muted expectations, while same-store sales growth (SSSG) came in at 7.1%.
HSBC highlighted that DMart’s EBITDA margin has now declined year-on-year for the fifth straight quarter, citing sustained competitive pressures.
While it expects DMart to open 54 stores in FY26, it adds that even a more aggressive store rollout doesn’t change its fundamentally negative stance.
JPMorgan has a ‘Hold’ recommendation, with a price target of Rs 4,150 per share.The brokerage mentioned that margin weakness sustains amidst higher investments, with 7% like-for-like growth and accelerated store expansion.
It views the intent to scale store additions and e-commerce capabilities positively, though it acknowledges near-term margin softness.
The next potential stock catalyst, as per the brokerage, could be the company’s annual management interaction with investors and analysts, the date for which is yet to be finalised.
Nuvama has reiterated its ‘Hold’ rating but revised its price target lower from ₹4,273 to ₹4,086.
While it said that a strong 7.1% like-for-like growth, aided by a 3% increase in average billing size despite deflation in staples and non-food items, this came at a cost. Gross margins fell 27 basis points and EBITDA margin dropped 66 basis points, driven by a mix shift toward lower-margin food, rising entry-level wages, and investments to enhance customer service.
Nuvama expects margin pressures to persist amid rising competition, and has cut FY26E/27E PAT estimates by 6% and 8%, respectively.
Motilal Oswal stands out with a ‘Buy’ rating and a price target of ₹4,500 per share.
While acknowledging a weak Q1FY26 print, with standalone EBITDA growing 8% YoY, missing estimates by 5% due to lower gross margins and higher retailing costs, the brokerage remains optimistic. Standalone revenue was up 16% YoY, supported by a 14% increase in store area, and like-for-like growth for mature stores came in at 7.1%, slightly below prior quarters due to deflation.
DMart added 9 stores in Q1FY26 (vs. 6 in Q1FY25), and Motilal Oswal believes that the acceleration in store additions remains the primary growth lever for the company.
Shares of Avenue Supermarts Ltd. ended 2.40% lower on Friday at ₹4,069. The stock has risen over 14% so far in 2025.
