Avenue Supermarts reports weak Q2: Should you buy, hold or sell DMart shares?

Shares of D-Mart’s parent company Avenue Supermarts were the focus of Monday’s session as the company posted a weak Q1 amid growth in the online and express (QC) space. Revenue during Q2 rose 14 percent to Rs 14,444.5 crore still better than marginal estimates. Margins, however, took a hit and came in at 7.6 percent compared to 8 percent reported in the same quarter last year.

In key product categories, the company’s share of revenue remains almost muted year after year.

According to the company’s investor presentation, added about 12 stores in the first half of FY2025.

The company’s like-for-like (LFL) growth slowed sharply from 9.1 percent in the June quarter to 5.5 percent in the September quarter. months at the end of the reporting period.

Should you buy, sell or hold DMart shares?

Citi maintains its sell rating and reduced target of Rs 3,500.

Meanwhile, Morgan Stanley downgraded the stock to underweight and overweight. Also, it lowered the price target on the stock significantly from Rs 5,769 to Rs 3,702. The brokerage said the company’s Q2 results missed our top line and margin expectations.

In addition, comments about competition from online grocery formats cast doubt on top-line growth of 20 percent. This can lead to more online and offline terminations, but defenders can’t always defend themselves, added Morgan Stanely.

Disappointing growth leads to lower expectations until the company develops more than one growth lever.