Avenue Supermarts Shares Surge 15% on Strong Q3 Update, Analysts Remain Divided

Shares of Avenue Supermarts, the parent company of the DMart retail chain, hit a 15% upper circuit on Friday, closing at ₹4,160.4 on the BSE following a robust Q3 business update. By market close, the stock was up 11.21%, trading at ₹4,023.25, even as the BSE Sensex dropped 0.90% to 79,223.11.

The company’s market capitalization stood at ₹2.61 trillion after the surge.

Q3 Performance Highlights

Avenue Supermarts reported a 17.4% year-on-year (YoY) increase in standalone revenue from operations, which reached ₹15,565.23 crore compared to ₹13,247.33 crore a year ago. The company’s total store count as of December 31, 2024, stood at 387, with 10 new store additions during the quarter.

In its September quarter, the company posted a 5.77% rise in consolidated net profit to ₹659.58 crore, up from ₹623.56 crore YoY. Revenue for the same period rose by 14.41% to ₹14,444.5 crore, while earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 29.3%, reaching ₹1,093.8 crore compared to ₹846 crore YoY.

Brokerage Views

Despite the strong quarterly performance, analysts remain divided on the stock’s outlook:

• Citi maintained a ‘sell’ rating with a target price of ₹3,500, citing challenges such as adverse product mix, increased competition from quick commerce players, and slower revenue growth in smaller towns. Citi’s target implies a 57x price-to-earnings ratio for September 2026.
• Motilal Oswal, on the other hand, reaffirmed a ‘buy’ rating with a higher target price of ₹5,300. Analysts highlighted the recovery in revenue per store, which grew over 4% YoY to ₹16.3 crore, compared to just 1% YoY growth in Q2. Additionally, revenue per square foot rose by approximately 3% YoY to ₹388,000.

Stock Performance and Market Trends

Over the past year, Avenue Supermarts shares have delivered modest gains of 2.27%, underperforming the Sensex, which rose 12% during the same period.

Looking Ahead

While the company’s growth trajectory is evident in its improved store performance and rising revenues, analysts remain cautious about the evolving competitive landscape and challenges in smaller towns. The contrasting views from Citi and Motilal Oswal highlight the mixed sentiment among investors.

With robust Q3 earnings and a strong start to 2025, Avenue Supermarts remains a stock to watch as it navigates competitive pressures and seeks to maintain its growth momentum.