DMart shares rise 3% after Q3 results; brokerages remain split on growth outlook

Shares of Avenue Supermarts , which operates the DMart supermarket chain, rose nearly 3% in early trade on Monday after the company reported robust earnings for the third quarter ended December 31, 2025.

Extending its gaining streak for the second straight session, DMart shares jumped as much as 2.96% to ₹3,917.95 on the BSE while its market capitalisation climbed to ₹2.54 lakh crore. The stock opened 0.95% higher at ₹3,841.60, after ending 0.45% higher in the previous session.

The counter touched its 52-week high of ₹4,916.30 on September 4, 2025, and a 52-week low of ₹3,337.10 on March 3, 2025. DMart shares have delivered 11% returns over the past year, while they have fallen nearly 3% over the last six months. Over the past one month, the stock has risen 1.5%.

Strong Q3 boosts stock

The retailer delivered a strong beat on profitability in Q3FY26, largely driven by a sharp expansion in gross margins, which rose by 50 basis points (bps) YoY to 14.6%. The improvement was supported by GST rate cut benefits, which led to lower discounting, as well as a favourable category mix, with a higher contribution from general merchandise & apparel (GM&A) and FMCG, partly offset by a lower share of the lower-margin food segment.

The company reported an 18.3% rise in consolidated net profit to ₹856 crore in the third quarter of FY26, compared with ₹724 crore in the same quarter last year, according to an exchange filing.

Avenue Supermarts’ standalone net profit surged 17.6% to ₹923.05 crore for the quarter ended December 31, compared with ₹784.65 crore in the year-ago period. Revenue from operations rose 13.3% to ₹18,100.88 crore, from ₹15,972.55 crore a year earlier.

During the quarter under review, DMart added 10 stores, taking total additions to around 27 stores in 9MFY26, compared with 22 stores in the year-ago period.

Analysts’ view on DMart Q3 performance

Following the Q3 results, Motilal Oswal reiterated its ‘BUY’ rating on DMart, saying the company’s value-focused model and superior store economics would ensure its competitiveness and customer relevance over the long term, despite quick commerce’s convenience-focused model. The brokerage upgraded its target price to ₹4,600 from ₹4,300 earlier.

“We raise our FY26–28 EBITDA and PAT estimates by 3–5%, primarily driven by higher gross margins. We build in a CAGR of 16%/16%/12% in DMart’s consolidated revenue/EBITDA/PAT over FY25–28E, driven by a 15% CAGR in store additions and ~6% LFL growth,” the brokerage said in its report.

ICICI Securities maintained its ‘HOLD’ rating, stating that the company continues to operate as a business prioritising stability over growth acceleration. While margins surprised positively, with EBITDA margin improving to 8.4%, the brokerage attributed this to execution discipline and tight cost control, even amid an unfavourable business mix.

“A meaningful re-rating would require a sustained recovery in discretionary-led L2L growth and store-level productivity, rather than further margin support alone. Earnings growth is therefore likely to remain steady rather than sharp,” the report said.

In contrast, JM Financial maintained its ‘REDUCE’ rating, noting that Q3FY26 revenue growth remained modest at 13% YoY, largely driven by a 14% YoY expansion in retail area, while revenue per square foot remained flat. Like-for-like (LFL) growth slowed to 5.6%, decelerating 120 basis points QoQ, while bills per store per day declined 2% YoY, indicating continued pressure on demand and throughput.

Global brokerages split

Global brokerages have offered divergent views on Avenue Supermarts following its Q3 results. CLSA remained the most bullish on the stock, while Jefferies and Nuvama maintained Hold ratings, reflecting a more balanced outlook. In contrast, Citi stayed cautious and reiterated its Sell rating, citing concerns over growth momentum and the sustainability of recent margin gains.

CLSA reiterated its High Conviction Outperform rating and raised its target price to ₹6,185, saying the margin expansion was well ahead of expectations and reflected improved operating efficiency, with profit growth outpacing revenue growth.

In contrast, Citi reiterated its Sell call with a target price of ₹3,150, citing a slowdown in same-store sales and risks to margin sustainability. Citi highlighted that LFL growth moderated to 5.6%, leading to revenue growth below its estimates. It believes the gross margin expansion was likely driven by one-off factors, such as inventory liquidation by FMCG companies during GST rate changes, or reduced discounting by DMart amid rising competition from quick-commerce players.

Jefferies maintained its Hold rating with a target price of ₹4,050, noting that while revenue growth continues to moderate, EBITDA margins rose to a multi-quarter high. The brokerage flagged steady store additions, a likely lumpy expansion in the coming quarter, and an upcoming CEO transition, while also raising concerns around disclosures.

Nuvama also retained its Hold rating with a target price of ₹4,351, attributing the stronger profit growth primarily to higher gross margins, likely aided by reduced discounting following GST rate cuts.

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