DMart share price drops 2% after Q2 results; should you buy, sell or hold this Radhakishan Damani-owned stock?

Avenue Supermarts (DMart) share price declined 2 per cent in morning trade on the BSE on Monday, October 13, after the company reported a 4 per cent year-on-year (YoY) rise in its September quarter (Q2FY25) net profits. DMart share price opened at ₹4,319.50 against its previous close of ₹4,319.70 and dropped 2 per cent to an intraday low of ₹4,231.70. Around 9:30 am, the Radhakishan Damani-owned stock traded 1.55 per cent lower at ₹4,252.60. Equity benchmark Sensex was 0.36 per cent down at 82,200 at that time.

DMart shares have surged over 19 per cent this year so far, significantly outperforming the Sensex, which has gained by about 5 per cent.

DMart Q2 results

Avenue Supermarts, which owns and operates retail chain DMart, on Saturday, October 11, reported a 3.85 per cent year-on-year (YoY) rise in its consolidated net profit at ₹684.85 crore for Q2FY26.

PAT margin stood at 4.1 per cent in Q2FY26 as compared to 4.6 per cent in Q2FY25. Revenue from operations grew 15.45 per cent YoY to ₹16,676.30 crore in the same quarter.

DMart shares: Should you buy, sell or hold after Q2 results?

Brokerage firms have mixed views on the stock after the September quarter earnings. Some of them have maintained their buy calls on the stock, while some suggest “reducing” it.

According to brokerage firm Motilal Oswal Financial Services, DMART posted in-line results in Q2FY26, as standalone EBITDA grew by 11 per cent YoY and margin contracted 30 basis points YoY to 7.6 per cent.

"After three quarters of contraction, DMart’s gross margin expanded 5 basis points YoY to 14.2 per cent (nearly 20 basis points beat) in Q2FY26. However, the cost of retailing (CoR)

remained elevated, with nearly 7 per cent YoY uptick on a per square feet basis (up 35 bps YoY)," said Motilal.

The brokerage firm has a buy call on the stock with a target price of ₹5,000, implying a 16 per cent upside potential.

Motilal said that with quick commerce (QC) players potentially shifting their focus to profitable growth, the peak of competitive intensity may be behind. However, the brokerage firm added that increased pricing competition from the entry of large online and offline retailers in QC remains a key monitorable and could weigh on DMart’s near-term growth and margins.

Motilal believes DMart’s value-focused model and superior store economics will ensure its competitiveness and customer relevance over the longer term despite QC’s convenience-focused model.

"Acceleration in store addition remains the key growth trigger for DMart. We built nearly 60 store additions in FY26 against 17/50 store additions in the first half of FY26 and FY25, respectively," said Motilal Oswal.

The brokerage firm has raised its FY26E EBITDA estimate by nearly 2 per cent, driven by higher gross margin, while keeping FY27-28 estimates broadly unchanged. The FY26-28E PAT estimate is also broadly unchanged.

"We build in a CAGR of 18 per cent, 18 per cent and 16 per cent in DMart’s consolidated revenue, EBITDA and PAT, respectively, over FY25-28E, driven by a 15 per cent CAGR in store additions and nearly 7 per cent like-to-like growth," said Motilal Oswal.

"We roll forward our valuation base to December 2027 (versus September 2027 earlier) and assign nearly 46 times EV/EBITDA multiple (implying nearly 80 times December 2027 P/E) to arrive at our revised target price of ₹5,000 from ₹4,800 earlier," Motilal Oswal said.

On the other hand, JM Financial has maintained a "reduce" call on the stock with a revised target price of ₹4,100 from ₹4,000 earlier.

The brokerage firm has reduced its FY26-28 EPS estimates by nearly 2 per cent, baking in elevated operating expenses, higher depreciation and interest cost owing to higher store additions, leading to a lower PAT CAGR of 15 per cent versus 18 per cent revenue CAGR over FY25-28E.

"We note that PAT CAGR for DMart is only 7 per cent over FY23-25, and even in the first half of FY26, it has delivered only 4 per cent PAT growth; this implies that DMart needs to deliver significant acceleration in revenue growth and profitability, or else there is a possibility of a further derating in target multiples," JM Financial said.

"We maintain our 'reduce' rating with a target price of ₹4,100 from ₹4,000 earlier on roll-over of the target multiple of 65 times P/E to September 2027," said JM Financial.

Some technical experts believe the stock appears to be in a base-building phase before the next directional move.

Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers, noted that Avenue Supermarts has experienced a sharp correction of nearly 720 points (approximately 14 per cent) from its recent peak and is currently trading near the ₹4,260 mark.

This level coincides with a crucial previous support zone as well as the 200 DEMA, making it technically attractive for traders and investors.

On the indicator front, Patel said the MACD is signalling a slowdown in bearish momentum, suggesting that the downside may be losing steam.

"Going forward, the stock is expected to consolidate between ₹4,200 and ₹4,350 in the near term. Any sustained trade above this range could pave the way for a recovery towards ₹4,600, while a daily close below ₹4,100 would act as a stop-loss level. Overall, the setup indicates a base-building phase before the next directional move," said Patel.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.