JPMorgan cuts target price for DMart shares to Rs 4,150 after Q3 results missed estimates

JPMorgan has maintained its “Neutral” stance on Avenue Supermart (DMart) but slashed its target price to ₹4,150 from ₹4,800, citing below-estimate Q3 FY25 results and continued margin pressures.

JPMorgan has maintained its “Neutral” stance on Avenue Supermart (DMart) but slashed its target price to ₹4,150 from ₹4,800, citing below-estimate Q3 FY25 results and continued margin pressures. While DMart reported a robust 17.7% YoY revenue growth to ₹15,972.55 crore, EBITDA and PAT fell short of expectations by 3% and 5%, respectively. PAT stood at ₹723.54 crore, rising 4.8% YoY, while EBITDA grew by 8.7% YoY to ₹1,217.24 crore, with margins slipping to 7.6% from 8.3% in Q3 FY24.

The decline in margins was attributed to elevated operating expenses due to store expansion and increased discounting intensity in the FMCG category, especially in metro towns. Gross margins remained flat YoY at 14.7%, with a rising share of food sales impacting the overall mix. Same-store sales growth (SSSG) improved to 8.3% YoY, rebounding from 5.5% in Q2 FY25.

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JPMorgan also highlighted a leadership transition as a key development in the quarter. DMart announced Mr. Anshul Asawa as CEO Designate, effective March 2025. He will succeed current MD & CEO Neville Noronha in February 2026. While the brokerage acknowledges DMart’s strong execution capabilities and revenue growth, it has expressed concerns over subdued FMCG demand and persistent margin pressures, resulting in lower profitability projections. JPMorgan believes these challenges will likely cap DMart’s near-term upside.