Avenue Supermarts, the operator of DMart, saw its share price jump by 10% to hit the upper circuit after delivering a strong Q3 FY25 performance. This rally follows impressive store additions and a solid revenue boost, but is it sustainable? Let’s find out!
Avenue Supermart: A quick background
Avenue Supermarts Limited, the parent company of DMart, is one of India’s largest and fastest-growing retail chains. Founded by Radhakishan Damani, DMart has consistently expanded its store count and revenue, catering to value-conscious customers across the country.
DMart’s retail model focuses on offering daily essentials and groceries at competitive prices, driving high footfalls and repeat customers. Over the years, its efficient operations and steady growth have made it a favourite among investors.
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Why did Avenue Supermarts’ share price surge?
The sharp rise in Avenue Supermarts share price was triggered by the company’s Q3 FY25 results. The company reported a 17.5% year-on-year (YoY) increase in standalone revenue, reaching ₹15,565.23 crore compared to ₹13,247.33 crore in Q3 FY24.
Additionally, the company added 10 new stores during the quarter, bringing the total store count to 387 by December 31, 2024.
Motilal Oswal Financial Services highlighted that DMart plans to add ~18 more stores in Q4 FY25, aiming for a total of 40 new store additions in the fiscal year.
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| Key Metrics | Q3 FY25 | Q3 FY24 | Growth (YoY) |
| Revenue from Operations | ₹15,565.23 crore | ₹13,247.33 crore | 17.50% |
| Store Count | 387 | 356 | 12.0% |
| Net Profit (Q2 FY25)* | ₹710 crore | ₹659 crore | 7.90% |
| EBITDA (Q2 FY25)* | ₹1,105 crore | ₹1,002 crore | 10.30% |
Source – Livemint
How did the market react?
Avenue Supermarts share price surged 10% to ₹3,972.20 on the NSE, hitting the upper circuit limit. By mid-day, the stock extended gains to 15%, reaching ₹4,160.40 on the BSE. This rally reflects investor confidence driven by strong revenue growth and store expansion.
Despite the surge, DMart shares remain 32% below their 52-week high of ₹5,484, achieved in September 2024. However, the current price is still 22% higher than the 52-week low of ₹3,400.
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DMart vs. Nifty 50 Performance
| Time Period | DMart Return | Nifty 50 Return |
| Last 5 Trading Sessions | 18% | 1.50% |
| Last 1 Month | 8% | -1.30% |
| Last 6 Months | -13% | -1% |
| Year to Date | 17% | 2% |
What are analysts saying?
Brokerages have mixed views on DMart’s future outlook. While some remain bullish, others express caution regarding competition from quick commerce and slower same-store sales growth (SSSG).
- Motilal Oswal: ‘Buy’ rating with a target price of ₹5,300 (47% upside from the current price)
- CLSA: ‘Outperform’ rating with a target price of ₹5,360 (50% upside)
- Morgan Stanley: ‘Underweight’ rating, target price of ₹3,702 (4% upside)
- Citi Research: ‘Sell’ rating, target price of ₹3,500
Motilal Oswal anticipates strong revenue growth driven by store expansions, while Morgan Stanley and Citi Research cite risks from quick commerce and slower growth.
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Why should you invest in DMart?
Advantages:
- Consistent Growth: DMart has shown strong revenue growth (17.5% YoY in Q3 FY25).
- Expanding Store Network: 40 store additions planned for FY25.
- Resilient Business Model: The focus on essentials and value pricing ensures steady demand.
- Long-Term Play: Analysts like CLSA and Motilal Oswal predict significant upside.
Risks to Consider:
- Competitive Pressure: Quick commerce platforms like Blinkit and Zepto pose threats.
- Slower Growth: Q2 growth slowed compared to historical performance.
- Valuation Concerns: Some brokerages believe the stock is overvalued, limiting short-term gains.
The bottom line
Avenue Supermarts share price continues to reflect investor optimism, but mixed analyst views highlight the need for careful consideration. With strong revenue growth and aggressive store expansion, DMart remains a long-term growth story, but competition and valuation could limit immediate returns.
