The share price of Avenue Supermarts, which operates the DMart retail chain, showed little movement in Monday's trading session. This muted response came after the company announced its financial results for the third quarter of the fiscal year 2026 over the weekend. While the earnings figures themselves were solid, the market reaction was tepid, reflecting mixed analyst sentiment.
Breaking Down DMart's Q3 FY26 Financial Performance
Avenue Supermarts reported a consolidated net profit of ₹855.92 crore for the quarter ending December 2025. This marks a significant 18.3% increase compared to the ₹723.72 crore profit recorded in the same period the previous year (Q3 FY25).
On the revenue front, the company's income from operations climbed to ₹18,100.88 crore, up by 13.3% year-on-year from ₹15,972.55 crore in Q3 FY25.
A key highlight was the improvement in profitability margins. The company's Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) surged to ₹1,463 crore from ₹1,217 crore a year ago. Consequently, the EBITDA margin expanded to 8.1% in Q3 FY26, up from 7.6% in the corresponding quarter last fiscal year.
Brokerage Verdict: A Spectrum of Caution
Despite the strong bottom-line growth, leading brokerages have expressed reservations, leading to a consensus of caution.
Citi has taken the most bearish stance, assigning a 'Sell' rating with a target price of ₹3,150 per share. The brokerage pointed to a deceleration in same-store sales growth (SSSG) to 5.6% as a primary concern. It noted that the 13% revenue growth missed its estimates, partly due to deflation in staple products. Citi also warned that the margin expansion might not be sustainable, potentially linked to temporary factors like FMCG discounts or GST-related adjustments. It highlighted that profit growth has lagged revenue growth in 10 of the last 12 quarters, citing pressure from quick-commerce rivals and rising costs.
Nuvama Institutional Equities has maintained a 'Hold' recommendation, though it revised its target price down to ₹4,351 from ₹4,580. The brokerage adjusted its future estimates, citing the current slower growth trajectory and an increased focus on margins. "We continue to recommend a 'HOLD' on the stock," Nuvama stated.
Jefferies also advised investors to 'Hold' the stock, with a target price of ₹4,050. While acknowledging the positive earnings surprise driven by margins, Jefferies emphasized worries over slowing revenue growth and weak like-for-like sales trends. It also flagged potential execution challenges related to the company's store expansion plans and an upcoming leadership transition in the CEO role.
Market Reaction and Outlook
Reflecting the cautious analyst calls, DMart's stock price was flat during the trading session on Monday. The share opened at ₹3,841.60 on the BSE, reaching an intraday high of ₹3,917.95 and a low of ₹3,764.35.
The overarching narrative from the Q3 results is one of dichotomy: robust profit and margin growth on one hand, countered by concerns over slowing underlying sales momentum and margin sustainability on the other. Investors are now weighing the company's operational efficiency and scale benefits against the intensifying competitive landscape and macroeconomic factors affecting consumer spending.
