Avenue Supermarts share price falls 3% after Radhakishan Damani-promoted DMart announces Q1 update. Time to buy or sell?

Stock Market Today. Avenue Supermarts (DMart) share price declined more than 3% in the morning trade on Thursday Radhakishan Damani-promoted firm announced business updates for the first quarter of the fiscal year 2025-26 (Q1) post-market hours on Wednesday.

Avenue Supermarts share price opened at ₹4379.95 on the BSE on Thursday, almost 1% lower than the previous day's closing price of ₹4392.95. Avenue Supermarts share price thereafter dipped to ₹4220 and marked an intraday decline of more than 3%.

DMart Q1 Updates

Avenue Supermarts, in its Q1 FY26 update, said that the standalone revenue from operations for the quarter ended June 30, 2025, stood at ₹15,932.12 crore. These standalone revenue indicated by DMart marked a more than 16% year-on-year rise compared to ₹13,711.87 reported by the company during the April-June 2024 quarter last fiscal year.

Avenue Supermarts also said that the total number of stores as of June 30, 2025, stood at 424. This also included one store at Sanpada, Navi Mumbai, Maharashtra, currently closed for customers due to renovation.

Operating performance to be watched for 

While revenue growth remains promising, it missed analyst estimates. According to JM Financial Services, the revenue growth was 1% below its initial estimate and 2% below consensus estimates. Additionally, all eyes are on the operating performance of the company. The rising competition is one of the key reasons for caution among analysts.

Analysts say that DMART continues to face quick commerce-led pressure in metros, prompting it to expand. Price wars in quick commerce, where 70–80% of the basket is made up of foods and FMCG, and the long-term pressure on margins is to be watched.

“Management has indicated pressure on gross margins driven by higher competitive intensity in the FMCG space. On opex, DMart is seeing a surge in wages due to demand-supply mismatch along with elevated investments for building and improving service levels," said analysts at Nuvama Research.

Against this backdrop, the brokerage tweaked its FY26E/27E revenue slightly by 0.2%/-0.2%, and building in softness in margins, it trimmed FY26E/27E PAT by -0.3%/-3%. Nuvama has a 'Hold' rating on the stock with a target price of ₹4,273.

JM Financial estimates a ~40 bps YoY dip in EBITDA margin to 8.5% in Q1FY26, despite expectations of flat gross margin, largely on account of higher operating cost. It further expects PAT to grow 7% YoY to ₹8.7 bn largely on account of increase in depreciation expenses and lower other income.

Disclaimer: The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.