Shares of Avenue Supermarts slipped in Monday’s session, trading near Rs 4,359.90, even after the company reported strong quarterly growth and received bullish commentary from global brokerages.
Why are DMart shares falling today
The stock declined despite positive updates largely due to valuation concerns and expectations already being priced in. Avenue Supermarts reported standalone revenue of Rs 1,72,045 crore for the quarter, slightly ahead of estimates, with sales growth of 18.9 percent year on year.
While the growth remains strong, the market reaction suggests that investors were expecting even stronger upside given the stock’s premium positioning.
What brokerages are saying on DMart
Global brokerage CLSA has maintained a high conviction outperform rating on the stock with a target price of Rs 6,583. Morgan Stanley has upgraded the stock to overweight and raised its target price to Rs 5,188.
Both brokerages highlighted strong revenue growth, improving inflation trends, and aggressive store expansion as key positives. The company added 58 new stores during the quarter, taking its total store count to 500.
They also noted that rising inflation could act as a tailwind for DMart, supporting same store sales growth and strengthening its value focused positioning.
Why positive news is not lifting the stock
Despite strong fundamentals, the stock appears to be reacting to near term factors:
High valuation with P/E near 100, which leaves limited room for disappointment
Growth already in line with or slightly above expectations rather than significantly beating them
Profit booking after recent gains and strong brokerage upgrades
This suggests that the market had already factored in much of the positive outlook.
What the stock movement indicates
Avenue Supermarts shares were trading marginally lower by about 0.05 percent compared to the previous close of Rs 4,362.40. The stock saw early weakness despite strong operational updates, reflecting cautious investor sentiment at current valuations.
What lies ahead for DMart
Brokerages remain optimistic about medium term growth, expecting revenue expansion to improve further over the next two years supported by store additions and inflation led tailwinds.
However, near term stock movement may continue to depend on earnings delivery relative to already elevated expectations.
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