Shares of Avenue Supermarts, the parent company of DMart, fell nearly 2% on July 14 after the retailer reported a largely flat net profit for the first quarter of FY26.
The company posted a net profit of ₹773 crore for the April–June quarter, marginally lower than the ₹774 crore recorded in the same period last year, despite a 16.3% year-on-year increase in revenue to ₹16,359.7 crore. The performance highlights the twin pressures of rising competition and narrowing profitability impacting DMart, even as th company tries to expand its footprint.
Meanwhile, Ebitda margin shrunk to 7.94% from 8.68%, reflecting the strain on operating efficiency. The company benefited from favourable pricing in staples and non-food categories, but the broader retail landscape continued to struggle with growing price competition in the FMCG space and the aggressive entry of quick commerce players offering faster fulfillment.
Brokerage responses to D-Mart’s results have been cautious of the near-term. JPMorgan maintained a 'hold' rating with a target price of ₹4,150, stating that while DMart has delivered 7% like-for-like growth alongside faster store expansion, margin continues to weaken amid higher investments. The firm noted that the retailer's efforts around expansion and e-commerce buildout are encouraging, but warned that margins could soften further in the short term.
HSBC also remained cautious, retaining its 'reduce' rating and revising its target price downward to ₹3,600. It noted that Q1FY26 Ebitda and margin slightly missed even a muted consensus, with same-store sales growth at 7.1%. HSBC flagged that Ebitda margins have now declined year-on-year for five consecutive quarters, citing ongoing competitive intensity. It added that the company’s plan to add 54 stores in FY26, even though aggressive, does not change its overall negative stance.
Morgan Stanley echoed this sentiment, maintaining an 'underweight' rating with a target price of ₹3,350. The brokerage said the Q1 earnings missed consensus estimates on both revenue and margin fronts. It attributed the shortfall to rising competition and continued capability investments, both of which are likely to weigh on the business. Morgan Stanley also noted that the latest results and management commentary add to the stock’s ongoing de-rating.
