HSBC has maintained its reduce rating on Avenue Supermarts (D-Mart) with a target price of ₹3,700 per share following its September quarter (Q2FY26) results, which showed soft margins and a slowdown in same-store sales growth. The company reported a 15.5% year-on-year rise in consolidated revenue to ₹16,676 crore, while EBITDA grew 11% to ₹1,213.6 crore and PAT rose 2.3% to ₹684.9 crore. Margins declined to 7.3% from 7.6% a year earlier, largely due to higher operating expenses.
HSBC said that while gross margin decline appears to have stabilised, operating expenses remained elevated — contrary to management’s earlier commentary. As a result, EBITDA margin contracted by 30 basis points year-on-year. Like-for-like (LFL) sales growth also moderated to 6.8% in Q2, compared with 7.1% in the previous quarter.
The brokerage noted that D-Mart Ready, the company’s e-commerce arm, has exited five cities, now operating in 19. HSBC continues to value the stock at a price-to-earnings multiple of 60x, reiterating that its key concern remains the moderation in LFL growth amid intensifying competition.
Disclaimer: The views and recommendations above are those of HSBC. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
