DMart Stock Extends Slide to New 52-Week Low, Down 12% in October

DMart Shares Hit New Low Amid Mixed Analyst Sentiment Following Q2 Results

The stock of Avenue Supermarts, operator of the DMart retail chain, has reached a new 52-week low, raising concerns among investors as the company grapples with rising costs and competitive pressures.

Stock Performance and Market Context

DMart’s stock has been on a downward trajectory, with a notable 12% decline in October alone. The stock hit its 52-week low of ₹3,345.90 during intraday trading on Wednesday, marking a significant drop from its peak of ₹4,644 in April 2023 and an all-time high of ₹5,900 in October 2021. This performance contrasts with the broader market, as the Nifty index has only dipped by 0.5% this month, indicating that DMart’s challenges are more company-specific than market-wide.

The stock’s current trading levels are also noteworthy as they approach the 100-month moving average (100-MMA) of ₹3,329, a technical indicator that could suggest further volatility ahead. Investors are closely monitoring these levels as they could signal a potential reversal or continuation of the downward trend.

Q2 Earnings Overview

In its latest quarterly results, Avenue Supermarts reported a net profit of ₹803.60 crore for Q2 FY27, reflecting a 7.6% year-on-year increase from ₹746.55 crore a year earlier. Revenue from operations also saw an 18.4% rise, reaching ₹19,206.18 crore, up from ₹16,218.78 crore in the same quarter last year. However, the sequential comparison reveals a concerning 14.1% decline in net profit from ₹935.77 crore in Q1 FY27, despite a modest 4.7% growth in revenue.

These mixed results have led to varied reactions from analysts. While some maintain a positive outlook, others have expressed caution, particularly regarding DMart’s ability to manage rising costs and competition from discount retailers.

Analyst Ratings and Future Outlook

Following the earnings announcement, brokerage firms have issued mixed ratings on DMart stock. Elara Capital has maintained an ‘Accumulate’ rating, citing that the company’s store expansion is on track, with 18 new stores added in the first half of FY27. However, they have revised their earnings per share estimates for FY28 and FY29 down by 4-5% and lowered their target price from ₹4,700 to ₹4,200.

Conversely, PL Capital has downgraded its rating from ‘Hold’ to ‘Reduce,’ highlighting concerns over DMart’s gross margin pressure due to its inability to pass on commodity inflation amid fierce competition. This sentiment underscores the challenges DMart faces in maintaining profitability in a competitive retail landscape.

Key Highlights

• DMart stock has fallen 12% in October, hitting a new 52-week low of ₹3,345.90.
• Q2 net profit rose 7.6% YoY to ₹803.60 crore, but fell 14.1% QoQ.
• Revenue from operations increased 18.4% YoY to ₹19,206.18 crore.
• Analysts have mixed views, with Elara maintaining an ‘Accumulate’ rating and PL Capital downgrading to ‘Reduce.’
• The stock is trading near its 100-month moving average, indicating potential volatility.

Investor Note: The recent decline in DMart’s stock price, coupled with mixed analyst ratings, suggests that investors should closely monitor the company’s ability to navigate rising costs and competitive pressures while assessing the potential for recovery in its stock performance.