Avenue Supermarts (DMART IN) – Q4FY26 Result Update – Quick commerce to continue dent growth prospects – HOLD
Published on 03 May 2026
While D’Mart could gain from benign base in 1H27, repeating performance like 4Q26 looks unlikely as the pantry loading unwinds and overheads related to 58 new stores opened in 4Q26 and entry into 5 new states will curtail margins. We expect higher interest cost as overall debt levels have increased from Rs6.7bn to Rs22.7bn (including financial leases and in line with expectations).
We believe rising competition from quick commerce, are likely to limit growth across Modern trade and D’Mart Ready. We note D’Mart has exited 7 cities in last 1 year and now is confined to 18 cities. Accordingly, we build in EBITDA margins of 7.3%/7.1% for FY27/FY28 versus 7.5% in FY26. We expect the store addition pace to remain elevated with ~75 additions each in FY27/FY28. We estimate an EPS CAGR of 14.1% over FY26–28 and arrive at a DCF-based TP of Rs4410 (vs Rs4362 earlier). We retain hold with a negative bias given rich valuations of 77.4x FY28E EPS and sharp run up in stock price recently.
