Avenue Supermarts (DMART IN) – Q2FY27 Result Update – QC Competition to Cap Growth and Margins – Downgrade to ‘REDUCE’
Published on 11 Oct 2026
We cut our FY27/FY28/FY29 estimates by 4.4%/3.2%/4.4% and rating from Hold to Reduce, driven by 1) heightened competitive intensity from QC players, 2) limited pricing power amid commodity inflation, capping margin upside, and 3) continued muted store metrics. Q2FY27 results missed our estimates as lower GM, higher interest cost and lower other income affected profitability. Gross margin remained under pressure as D’Mart was unable to pass on commodity inflation amid heightened competition from QC players, with no meaningful competitive relief in sight. Store metrics remained muted, with sales/store and sales/sq. ft. declining by 0.7% and 0.1% YoY, respectively. Bill cuts grew 14.4% YoY, led by 76 store additions over the last three quarters; however, bills/store/day declined by 4.1%, reflecting dilution in store throughput as share of new clusters improves.
