Macquarie has maintained its “Underperform” rating on Avenue Supermarts stock (DMart) with a target price of ₹3,700 per share. This suggests a limited upside from the current market price (CMP) of ₹3,615.30.
Key highlights from Macquarie’s analysis:
- Q3 sales aided by recovery in specific segments:
- Sales in general merchandise and apparel showed improvement, supporting Q3 performance.
- Competitive headwinds weigh on growth:
- The brokerage expressed concerns over the impact of rising competition from quick commerce players, which is affecting Avenue Supermarts’ growth momentum.
- Sales growth recovery:
- Sales growth has rebounded closer to Q1FY25 levels, showing sequential improvement.
- Store additions on track:
- The company added 10 new stores in Q3, in line with expectations, bringing the total store count to 387.
- Guidance for Q3:
- Avenue Supermarts guided for standalone Q3 sales of ₹15,570 crore.
- Sequential gross margin pickup:
- A better product mix typically leads to a sequential improvement in gross margins during Q3, as observed in past trends.
Macquarie remains cautious, noting growth recovery and operational efficiency but highlighting competitive pressures as a key risk for sustained performance.
Disclaimer
This article is for informational purposes only and does not constitute investment advice. Readers should perform their own research or consult a financial advisor before making investment decisions.
