Macquarie has maintained its underperform rating on Avenue Supermarts (DMart), citing moderation in Q1 sales growth and only a marginal miss in sales targets. The brokerage retained its target price of ₹3,000 per share, compared to the current market price of ₹4,391.90.
The report notes that DMart saw a healthy pace of store additions during the quarter. Typically, Q1 benefits from a stronger gross margin given the product mix, and Macquarie assumes this trend will continue with a sequential uptick in both gross margin and EBITDA margin.
Despite the slight slowdown in sales growth compared to Q4, the brokerage believes that the company’s operational execution remains strong, particularly in expanding its store footprint.
Macquarie concluded that while Avenue Supermarts continues to deliver operational improvements, the current valuation leaves limited room for upside in the near term, justifying the underperform stance.
