Avenue Supermarts rises 3% post Q3, pares gains later; analysts weigh

While analysts are positive on Avenue Supermarts reporting margin recovery, they caution that pricing competition from quick commerce could limit margin sustainability-a key near-term monitorable

Avenue Supermarts, which runs a supermarket chain under the brand DMart, reported its Q3FY26 results on Saturday. While analysts are positive on company reporting margin recovery, they caution that pricing competition from quick commerce could limit margin sustainability—a key near-term monitorable.

 

At 9:33 AM, shares of Avenue Supermarts were trading 2.35 per cent higher at ₹3,894.55 per share. In comparison, the BSE Sensex was down 0.52 per cent at  83,141.04. Intra-day the stock gained 2.9 per cent, logging a day’s high at ₹3,917.95 per share. However, around 11:05 AM, the stock pared gains and was trading 0.47 per cent lower at ₹3,787.4 per share. 

Avenue Supermarts Q3 results highlights:

Avenue Supermarts in the December quarter (Q3FY26) reported an 18.28 per cent rise in consolidated net profit at ₹855.78 crore, as compared to ₹723.54 crore a year ago.

 

Its consolidated revenue from operations in the latest third quarter stood at ₹18,100.88 crore as against ₹15,972.55 crore in the year-ago period, it added. 

Brokerages’ view on Avenue Supermarts (DMart)

Motilal Oswal Financial Services | Buy | Target raised to ₹4,600 from ₹4,300

 

The brokerage noted that while DMart saw a margin recovery after several quarters, increased pricing competition from quick commerce could prevent margin sustainability and remains a key monitorable in the near term. 

 

“We believe DMart’s value-focused model and superior store economics would ensure its competitiveness and customer relevance over the longer term, despite quick commerce’s convenience-focused model,” Motilal Oswal said.

 

Acceleration in store addition remains the key growth trigger for DMart, the brokerage highlighted and expects 60 store additions in FY26. 

 

Analysts have raised their FY26-28 Earnings before interest, tax, depreciation and amortisation (Ebitda) and profit after tax (PAT) estimates by 3-5 per cent, primarily driven by higher gross margin (GM). 

 

In Q3, the company’s gross margins expanded 50 basis points (bps) year-on-year (Y-o-Y) to 14.6 per cent.   ICICI Securities | Hold | Target cut to ₹4,000 from ₹4,400  The brokerage reckons that a meaningful re-rating would require a sustained recovery in discretionary-led like-to-like (L2L) growth and store-level productivity, rather than further margin support alone. Earnings growth is therefore likely to remain steady rather than sharp. 

Margins delivered a positive surprise, with Ebitda margin at 8.4 per cent, driven by execution discipline and cost control despite an unfavourable mix. However, growth momentum remains capped, with L2L moderating to 5.6 per cent in Q3FY26, as against 8.3 per cent in Q3FY25; 6.8 per cent in Q2FY26), alongside store productivity still below pre-Covid levels.

 

JM Financial Institutional Securities | Reduce | Target cut to ₹3,950 from ₹4,100

 

Given the strong operational beat in Q3, the brokerage estimates FY26 earnings per share (EPS) to go up by 3 per cent; however, its FY27 estimates are largely unchanged and FY28

estimates are cut by 3 per cent largely on account of a cut in store opening estimates on slower-than-expected ramp-up in store openings and a cut in same store sales growth (SSSG) estimates. 

 

Q3FY26 standalone revenue grew 13 per cent Y-o-Y to ₹17,600 crore, led by 0.4mn sqft increase in area quarter-on-quarter (Q-o-Q) (up 14 per cent Y-o-Y) to 18.3mn sqft and 5.6 per cent SSSG. JM Financial cut its target multiple to 62x (from 65x earlier) on deceleration in revenue growth momentum, leading to a cut in target price. 

 

Meanwhile, reports said Goldman Sachs maintained its ‘Sell’ rating on the company, while raising its target price to ₹3,500 from ₹3,355. The brokerage noted that profit before tax (PBT) was aided by an expansion in gross margins, but said it sees the improvement as unlikely to be sustained.

 

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