Avenue Supermarts Shares Tumble 4% After Q1 Updates Disappoint Investors

Shares of Avenue Supermarts, the operator of D-Mart, declined by 4% on July 3 after the company’s Q1 FY26 business update came in below market expectations, dampening investor sentiment.

The retail chain reported standalone revenue of ₹15,932 crore for the quarter, marking a 16.2% year-on-year growth from ₹13,712 crore that it posted in the same period last year. While growth was positive, it fell short of the estimated 17% rise anticipated by the Street.

Reacting to the softer-than-expected figures, international brokerage Morgan Stanley maintained its ‘underweight’ rating on the stock, with a target price of ₹3,260. The firm noted that the lower-than-expected revenue growth could weigh on near-term investor confidence.

During the quarter, D-Mart opened nine new stores, up from six additions in the same period last year, but significantly lower than the 28 new outlets added in the previous quarter. This brings the total store count to 424. In Q1, the company also added a new store in Agra, its first major expansion in Uttar Pradesh since entering Ghaziabad.

Factoring this, Morgan Stanley estimated same-store sales growth (SSSG) for the quarter to be in the range of 3–4%.  It also expects the Ebitda margin for Q1 to come in at 7.8%, down from 8.7% in Q1 FY25.

Echoing a cautious stance, Macquarie also retained its ‘underperform’ rating with a target price of ₹3,000. The brokerage observed that Q1 sales growth showed a slight moderation compared to Q4 and came in marginally below expectations. However, it expects a sequential improvement in gross and Ebitda margins, aided by a favourable product mix typically seen in the first quarter.

In contrast, CLSA maintained a more optimistic view, reiterating its ‘outperform’ rating and setting a target price of ₹5,549. While acknowledging that Q1 standalone revenue was 2% below estimates, the firm continues to back the stock’s long-term potential.