DMart Shares Climb on Strong Q3 as Brokerages Clash on Growth
Overview
Avenue Supermarts' shares rose nearly 3% after reporting robust third-quarter earnings, with net profit up 18.3% to ₹856 crore. Gross margins expanded 50 basis points to 14.6%, driven by favourable product mix and GST benefits. However, brokerage houses remain divided on the stock's future outlook, with ratings ranging from 'BUY' to 'SELL'.
Stocks Mentioned
DMart's Q3 Performance
Avenue Supermarts, the operator of the popular DMart supermarket chain, saw its shares surge nearly 3% on Monday. The jump followed the company's announcement of strong earnings for the third quarter ended December 31, 2025. The stock climbed to ₹3,917.95 on the BSE, boosting its market capitalization to ₹2.54 lakh crore.
Profitability Boost
The retailer posted an 18.3% rise in consolidated net profit, reaching ₹856 crore for the quarter compared to ₹724 crore a year ago. Standalone net profit surged 17.6% to ₹923.05 crore. Revenue from operations grew by 13.3% to ₹18,100.88 crore from ₹15,972.55 crore year-on-year. Gross margins expanded by 50 basis points to 14.6%, aided by GST rate benefits and a higher contribution from general merchandise, apparel, and FMCG categories.
Store Expansion Continues
DMart added 10 new stores during the third quarter, bringing the total additions to approximately 27 stores in the first nine months of FY26. This expansion pace is higher than the 22 stores added in the same period last year, signaling continued physical growth.
Divergent Analyst Views
Brokerage firms presented a mixed reaction to the Q3 results. Motilal Oswal reiterated its ‘BUY’ rating, raising its target price to ₹4,600 and estimating a 16% CAGR in revenue over FY25-28. ICICI Securities maintained a ‘HOLD’ rating, citing a focus on stability over growth acceleration, and suggested a sustained recovery in discretionary growth is needed for re-rating.
JM Financial, however, reiterated its ‘REDUCE’ rating. The firm noted that revenue growth remained modest at 13% YoY, with revenue per square foot flat and like-for-like (LFL) growth decelerating to 5.6%. Global brokerages like CLSA remained bullish with an ‘Outperform’ rating and an increased target of ₹6,185, while Citi reiterated its ‘Sell’ call with a target of ₹3,150, citing concerns over margin sustainability and moderating LFL growth.
