Avenue Supermarts shares fall after analysts flag slowing growth, margin pressure

Shares of Avenue Supermarts Ltd., the operator of the DMart hypermarket chain, are trading nearly 2% lower on Monday, January 5, after the company delivered a mixed update for the December quarter.

Standalone revenue rose 13% year-on-year to ₹17,612.6 crore in the third quarter, compared with ₹15,565 crore in the same period last year. While the company reported double digit growth, revenue momentum continued to moderate, with the three year CAGR slipping to 15.7%.

According to brokerages, realisations may have come under pressure due to recent GST cuts.

During the quarter, Avenue Supermarts added 10 stores, taking total additions to 27 so far in FY26. Store additions over the past year stand at 14.2%, indicating steady network expansion even as growth trends soften.

However, the slowdown in revenue growth and standalone numbers falling short of estimates kept sentiment cautious, with brokerages remaining divided on the stock.

Citi maintained its 'Sell' rating on Avenue Supermarts with a price target of ₹3,250. The brokerage attributed the sharp moderation in growth to rising competitive intensity from quick commerce platforms, a weak demand environment and a higher share of store additions in smaller towns.

Citi also flagged concerns around moderating same store sales growth, margin pressure from quick commerce driven pricing and cost dynamics, and stretched valuations.

The brokerage pointed out that Avenue Supermarts has reported a year-on-year EBITDA margin decline in 11 of the last 12 quarters.

Morgan Stanley, meanwhile, has an 'Equal-weight' rating on the stock with a price target of ₹4,552, implying an upside of about 22% from current levels.

The brokerage estimated implied same store sales growth for the quarter at flat to low single digits.

Investors will closely track operating performance, changes in assortment mix and management commentary on store expansion when the company reports its detailed third quarter results.

Among the 29 analysts tracking Avenue Supermarts, eight have a 'Buy' rating, 12 recommend 'Hold' and nine have a 'Sell' call on the stock.

Shares of Avenue Supermarts are trading 1.77% lower at ₹3,654. The stock is down close to 3% so far in 2026.