Dmart parent shares in focus after Q2 margins decline; Analysts stay divided

Shares of Avenue Supermarts Ltd., the parent company of hypermarket chain DMart, will be in focus on Monday, October 13, as investors react to the company’s September quarter results announced over the weekend.DMart reported a 15.5% year-on-year growth in consolidated revenue for the July–September period to ₹16,676 crore, broadly in line with its earlier Q2 business update. EBITDA softened year-on-year as expected, while profit after tax declined due to higher depreciation costs.

Revenue mix

Foods: 57% vs 56.4% YoYNon-Foods and General Merchandise: 43% vs 43.6% YoY

Among other operational metrics, revenue per store rose 1%, while bill cuts increased 14%. The company also shut DMart Ready operations in five cities during the quarter and is now present in 19 cities.

Key factors to track include store expansion plans, the impact of a potential GST cut on Q3 sales value, and DMart Ready’s consolidation and growth strategy.Brokerage firm HSBC has a ‘Reduce’ rating on Avenue Supermarts with a price target of ₹3,700 per share, based on a PE multiple of 60x.

The brokerage wrote in its note that while gross margin decline has stabilised, operating expenses remain elevated, leading to a 30 bps YoY decline in EBITDA margin. It also highlighted a marginal moderation in like-for-like (LFL) growth to 6.8% in Q2FY26, compared with 7.1% in Q1FY26.

Morgan Stanley, meanwhile, maintained an ‘Equal-Weight’ rating on the stock with a price target of ₹4,552 per share.

The brokerage described Q2 as a “miss”, with consolidated revenue, EBITDA, and PAT rising 15%, 11%, and 4% YoY, respectively, which is 7% and 14% below estimates for EBITDA and PAT.

It also pointed out that LFL growth at 6.8% was a 10-quarter low (excluding Q2FY25), and DMart Ready’s presence has reduced to 19 cities from 25 in FY25.

Shares of Avenue Supermarts settled 0.53% higher at ₹4,328 on Friday. The stock has gained 22% so far this year.