HSBC has maintained its reduce rating on Avenue Supermarts (D-Mart) with a target price of ₹3,700 per share, highlighting concerns over the retailer’s narrowing pricing advantage and challenges in sustaining same-store sales growth (SSSG).
The brokerage said that pricing comparisons versus peers indicate a shrinking differential, which remains crucial as pricing continues to be D-Mart’s only significant competitive moat in India’s modern retail segment. HSBC added that the company’s ability to maintain this edge will be key to defending its market share and profitability amid intensifying competition.
It further noted that sustaining high SSSG will be difficult given the maturing store base and evolving consumer trends. The brokerage pointed out that D-Mart’s valuation remains highly sensitive to sales growth metrics — with every 1% change in SSSG translating to an 11% swing in fair value.
While store additions continue at a steady pace, HSBC believes the incremental network expansion may not be sufficient to offset the impact of muted same-store growth. It emphasised that the company’s near-term performance will depend on its ability to restore sales momentum while preserving its cost leadership.
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