DMart Stock: ICICI Securities Sees Stability Over Growth, Maintains Hold
Overview
ICICI Securities rates Avenue Supermarts (DMart) a "Hold," citing the company's focus on operational stability over aggressive growth. Despite a margin surprise of 8.4% EBITDA, like-for-like sales growth moderated, and store productivity remains below pre-pandemic levels. The brokerage forecasts steady earnings growth, maintaining a target price of ₹4,000 while cutting revenue estimates.
Stocks Mentioned
ICICI Securities has maintained a "Hold" recommendation on Avenue Supermarts (DMart), setting a revised target price of ₹4,000. The brokerage views the retail giant as prioritizing stability rather than accelerating growth.
Operational Performance
DMart reported an EBITDA margin of 8.4%, exceeding expectations due to disciplined execution and cost control. However, this was achieved despite an unfavorable product mix.
Growth momentum is constrained. Like-for-like (L2L) sales growth slowed to 5.6% in the third quarter of fiscal year 2026, down from approximately 8.3% in the prior year's comparable quarter. Store productivity also remains below pre-COVID-19 levels.
Earnings Outlook
The company's staple-heavy product mix and a carefully managed expansion of its online grocery service, DMart ReADY, offer earnings visibility and downside protection. These factors, however, cap potential gains in ticket size and limit operating leverage, especially as competition intensifies and urban consumer baskets fragment.
Analysts believe a significant re-rating of the stock would necessitate a sustained rebound in discretionary spending-led L2L growth and improved store-level productivity, beyond mere margin improvements. Consequently, earnings growth is projected to be steady rather than explosive.
Revised Estimates
ICICI Securities has adjusted its financial forecasts, reducing revenue estimates by approximately 2% and 4% for FY26E and FY27E, respectively. Conversely, earnings estimates for FY26E have been raised by about 4%.
The brokerage projects a compound annual growth rate (CAGR) of 16% for revenue, 17% for EBITDA, and 17% for profit after tax (PAT) between FY25 and FY28. The previous target price was ₹4,400.
