DMart's Q1 Results Reveal Margin Resilience But Analyst Caution Mounts Amid Quick Commerce Headwinds

DMart's Q1 Results Reveal Margin Resilience But Analyst Caution Mounts Amid Quick Commerce Headwinds​

Avenue Supermarts (DMart) shares are likely to be under close scrutiny as brokerages maintain a cautious stance following the release of its fiscal first quarter results. While the retail giant demonstrated steady profitability and margin strength, slowing like-for-like (LFL) sales growth and escalating pressure from quick commerce competitors continue to cloud the near-term growth outlook for the company.

DMart's Q1 Financial Performance Highlights​

DMart reported a consolidated net profit rise of 11.3 percent year-on-year, reaching Rs 860.6 crore for the quarter ended June. Revenue grew by 14.9 percent, recording Rs 18,794 crore. EBITDA saw a healthy increase of 15.4 percent, clocking in at Rs 1,499 crore.

The company managed to marginally improve its EBITDA margin to 7.97 percent from the previous year's 7.94 percent. Despite the moderation in revenue growth, which occurred despite numerous store openings near the end of March, profitability remained resilient due to stronger gross margins.

Brokerages Assess Growth Headwinds and Metro Market Slowdown​

There is a consensus among analyst firms that while DMart’s profitability remains solid, the slowing LFL sales growth and intensified competition in metropolitan markets pose significant risks. The primary concern centers on the impact of quick commerce across key retail segments.

Goldman Sachs maintained its Sell rating on the stock, setting a target price of Rs 4,000. The brokerage noted that flat year-on-year performance in metro markets was directly attributed to rising quick commerce competition and higher operating costs offsetting better gross margins.

JPMorgan held a Neutral rating but adjusted its target down to Rs 4,250. While supporting the stable EBITDA margins—driven by a 50-basis-point improvement in gross margins from an improved general merchandise and apparel mix—the brokerage highlighted that LFL growth slowed to 5.5 percent. This slowdown was noted particularly in older metro stores, suggesting a strong impact from quick commerce.

The State of DMart’s Digital Footprint and Market Sentiment​

Citi reiterated its Sell rating, targeting Rs 3,400, stating that revenue and earnings missed their estimates by roughly 4 percent and 9 percent, respectively. Citi observed that same-store sales growth slowed to 5.5 percent amid increased quick commerce competition and a reversal of pantry stocking trends in older metro stores.

Reflecting strategic adjustments, Citi noted the reduced footprint of DMart Ready, which exited seven more cities during the quarter, leaving its presence at 11 cities. The online grocery subsidiary’s revenue rose 5 percent year-on-year, although its loss widened by 32 percent to Rs 75.3 crore.

Jefferies retained a Hold rating with a target price of Rs 4,500. This brokerage indicated that softer LFL growth was partially attributable to demand being pulled forward into March. Despite this, the flat growth in older, high-throughput metro stores remains a key concern given the rapid expansion of quick commerce rivals.

Stock Performance and Valuation Snapshot​

Shares of Avenue Supermarts closed at Rs 4,075 on Friday, giving the company a market capitalization of approximately Rs 2.66 lakh crore. DMart stock has gained 9.7 percent so far in 2026, outperforming the Nifty 50, which is down 7.4 percent over the same period.

Both Jefferies and Citi noted that DMart Ready has reduced its online footprint to 11 cities from a peak of 25 after the recent exits. This continued focus on core retail amid digital market pressures highlights the complex operational environment the company faces.