Mumbai, India – Shares of Avenue Supermarts Ltd (DMart), the parent company of the popular retail chain, tumbled 4% on October 12, 2026, following its September quarter (Q2) results. Global brokerages reacted with a mix of 'Reduce', 'Neutral', and 'Hold' ratings, citing a significant 'margin shocker' after three consecutive quarters of improvement.
Q2 Performance Disappoints Analysts
The latest quarterly results revealed an adverse product mix, subdued store-level productivity, and higher operating costs, all contributing to renewed pressure on DMart's profit margins. This has prompted several leading investment banks to revise their outlooks and target prices for the Radhakishan Damani-led company.
Brokerage Ratings and Price Targets
- JPMorgan: Issued a 'Neutral' rating with a target price of Rs 3,925.
- HSBC: Maintained a 'Reduce' rating, setting a target of Rs 3,340.
- Jefferies: Assigned a 'Hold' rating and revised its target price lower to Rs 4,000, noting that despite healthy demand, profitability disappointed due to higher food mix, weaker gross margins, wage inflation, and inventory build.
- UBS: Suggested a 'Buy' rating with a target of Rs 4,500.
- Goldman Sachs: Set a target of Rs 3,500.
- Bernstein: Projected DMart shares to reach Rs 5,000.
According to Bloomberg data compiled by Business Today, PL Capital holds the lowest target price among the brokerages at Rs 3,214, while CLSA has the highest at Rs 5,723.
Divergent Views on Future Outlook
Nuvama Institutional Equities highlighted that margin pressure has resurfaced after three quarters of gains, recalling that 3.5 years of continuous profit compression were a key factor in the stock's previous multiple de-rating. Nuvama maintained a 'HOLD' rating with a revised target of INR3,784.
Systematix noted an improvement in same-store sales growth (SSSG) for stores operational for two years or more, rising to 9.5% in Q2 from 6.8% year-over-year. However, this momentum did not translate into commensurate overall profitability, reflecting the impact of lower-margin sales and operating cost pressures. Systematix suggested a 'Hold' with a target of Rs 3,520, anticipating higher Q3 revenue growth.
In contrast, CLSA maintained its high conviction 'Outperform' rating with an unchanged target price of Rs 5,723. CLSA emphasized that DMart's value proposition continues to resonate with consumers, particularly in an inflationary environment, and expects robust store additions combined with rising private-label penetration to drive healthy long-term growth.
Market Reaction and Long-Term Prospects
The immediate market reaction saw the stock trading down, aligning with Jefferies' prediction of a likely downward trend following the Q2 miss. Investors are now closely watching how DMart navigates these profitability challenges while continuing its expansion strategy and enhancing store-level productivity.