Goldman Sachs has maintained its ‘Sell’ rating on Avenue Supermarts (DMart) while reducing the target price to ₹3,425 from ₹4,000, citing increasing competitive challenges and a lack of differentiation in key market segments.
The brokerage has lowered its earnings estimates for DMart by 4.2%, 6.2%, and 6.1% for FY25, FY26, and FY27, respectively. Goldman Sachs notes that DMart has raised its grocery product price discount from approximately 15% over MRP in July 2024 to 25% in December 2024, highlighting intensified pricing pressure.
The report further states that DMart does not hold a significant competitive advantage in fresh food categories in urban areas, which are crucial for growth. Additionally, vast sections of India’s grocery market are not addressable by DMart’s current operating model, limiting its market reach.
Goldman Sachs believes that these factors are likely to challenge DMart’s ability to sustain its competitive moat and navigate the evolving retail environment effectively.
