DMart shares fall 4% post Q1 results: Buy, hold or sell stock? Here are target prices

Shares of Avenue Supermarts Ltd (DMart) shed 4 per cent in Monday's trade following less-than-expected June quarter results. The stock declined 4.23 per cent to hit a low of Rs 3,910, as a couple of brokerages cut their target prices on the stock, citing rich valuations.

Antique Stock Broking said DMart's Q1 margins cushioned a slower revenue growth. It said sales growth of 15 per cent YoY in Q1 was impacted by muted same-store sales growth of 5.5 per cent. The brokerage said the flat performance in older stores across large metros was partially offset by healthy growth in non-metro markets. 

"Going ahead, we expect store additions to accelerate over the remainder of FY27, with DMart likely to add around 70-80 stores during the year after adding only three stores in 1QFY27. We have marginally tweaked our estimates. We roll forward our valuation to 1HFY29E (from FY28E) and reduce our target multiple to 35x EV/Ebitda, resulting in a revised target price of Rs 4,182 (from Rs 4,437). Maintain HOLD rating," it said.

Despite Monday's fall, the DMart stock is up 8 per cent yera-to-date.

Elara Securities said DMart trades at 60 times estimated FY28 earnings per share. The brokerage expects DMart's margin to remain broadly stable as quick commerce (QC) discounting normalises, creating scope for modest margin upgrade. 

"However, any such benefit is likely to be offset by weaker LFL growth, particularly in the metro markets, where we had earlier assumed 7.5 per cent LFL growth. While FMCG price increases may offer temporary support, medium-term LFL may remain constrained. Consequently, we do not expect material changes to our estimates," it said while suggesting a target of Rs 4,700 on the stock.  

Emkay Global suggested a 'Sell' on the stock with a target of Rs 3,700. It said primary disappointments stem from slower growth in bill size and likely slower ramp-up in new store additions. After a bump in Q4, the like-for-like (LFL) growth normalized to 5.5 per cent in Q1, largely led by maturing of new stores, with older stores in large metros seeing a flat growth trend. 

After accelerated store expansion in Q1, the pace of store additions moderated to three stores in Q1 and remains a key growth lever, MOFSL said.

"We assign a 40 times September 2028 EV/Ebitda multiple (implying 72 times September 2028 P/E) to arrive at our revised target of Rs 4,800. We reiterate BUY on DMart," MOFSL added.