Morgan Stanley has reiterated its ‘Underweight’ rating on Avenue Supermarts (DMart), assigning a target price of ₹3,260 per share, indicating a downside from the current market price of ₹4,155.00. The brokerage noted that the company’s standalone Q4FY25 revenue stood at ₹14,460 crore, registering a 16.7% year-on-year growth, which was in line with estimates.
The report highlights that DMart’s five-year compound annual growth rate (CAGR) for Q4 came in at 18.5%, slightly higher than Q3FY25’s 18.2% but still below the 20% average CAGR recorded between Q1FY24 and Q4FY24. While growth remains healthy, Morgan Stanley sees this as a sign of a potential plateau in topline acceleration.
Notably, DMart added 28 new stores during the quarter — the highest quarterly increase ever — underscoring management’s aggressive expansion strategy. The brokerage estimates that the implied same-store sales growth (SSSG) for the quarter was between 8% and 9%.
Despite solid operational metrics, Morgan Stanley remains cautious, citing valuation concerns and potential margin risks. The stock currently trades significantly above the target, suggesting a limited margin of safety at current levels.
Disclaimer: This article is for informational purposes only. Investors are advised to consult with certified financial advisors before making any investment decisions.
