Avenue Supermarts , the parent company of retail chain DMart, delivered solid Q3 FY26 financial results, though the market response remained muted with shares trading flat during Monday's session. The company's earnings announcement over the weekend showcased strong profitability growth, but brokerages expressed mixed sentiments regarding future prospects.

Financial Performance Highlights

The company's Q3 FY26 results demonstrated robust growth across key financial metrics. The following table summarizes the quarter's performance:

The company's consolidated profit after tax reached ₹855.92 crore, marking an 18.3% increase from ₹723.72 crore in the corresponding period last year. Revenue from operations showed steady growth at 13.3% year-on-year, climbing to ₹18,100.88 crore from ₹15,972.55 crore in Q3 FY25.

Margin Expansion and Operational Efficiency

Earnings before interest, tax, depreciation, and amortisation (EBITDA) demonstrated strong momentum, rising to ₹1,463.00 crore compared to ₹1,217.00 crore in the same quarter last year. The EBITDA margin improved to 8.1% from 7.6% in Q3 FY25, indicating enhanced operational efficiency and cost management.

Mixed Brokerage Recommendations

Despite the positive earnings surprise, brokerages presented varied outlooks on DMart's future performance:

Nuvama Institutional Equities - Hold Rating

Nuvama maintained a 'HOLD' recommendation while adjusting its target price to ₹4,351 from the previous ₹4,580. The brokerage cited the current slower growth trajectory and heightened focus on margins, leading to revisions in FY26E/27E revenue and PAT estimates by -0.6%/-3.7% and +5.4%/-3.5%, respectively.

Citi - Sell Rating

Citi assigned a 'Sell' rating with a target price of ₹3,150 per share, highlighting several concerns:

• Same-store growth declined to 5.6%
• Revenue growth of 13% fell short of estimates
• Deflation in staples contributed to revenue growth slowdown
• Sustainability of margins poses risks
• Profit growth has trailed revenue growth in 10 out of the last 12 quarters

Jefferies - Hold Rating

Jefferies maintained a 'Hold' rating with a target price of ₹4,050, acknowledging the earnings surprise driven by margins while emphasizing concerns about slowing revenue growth and weak like-for-like trends. The brokerage also pointed to potential execution challenges related to store expansions and upcoming CEO transition.

Share Price Performance

DMart shares opened at ₹3,841.60 on the BSE, with an intraday high of ₹3,917.95 and a low of ₹3,764.35. The flat trading performance reflected investor caution despite the strong quarterly results, as market participants weighed growth concerns against margin improvements.

Avenue Supermarts shares surged to a one-month high on Monday, climbing 3.1% to ₹3,918.60 following the release of strong Q3FY25 results. The stock closed at ₹3,892.60, representing a 2.4% gain for the day and extending the company's market capitalization to approximately ₹2.53 lakh crores.

Strong Financial Performance Drives Rally

The buying interest was triggered by a margin-led earnings beat in the October-December quarter. Avenue Supermarts, which operates the DMart retail chain, delivered robust financial performance across key metrics.

The company's EBITDA rose over 20% year-on-year, with margins expanding to 8.1%. This improvement was primarily attributed to lower discounting following GST changes and a favorable category mix that supported profitability.

Mixed Brokerage Sentiment Despite Results Beat

While the stock rallied on strong quarterly numbers, brokerage houses have expressed varied opinions on Avenue Supermarts' medium-term prospects. Several firms have flagged concerns about the sustainability of margin gains and competitive pressures.

Motilal Oswal stands out with a 'Buy' rating and target price of ₹4,600, implying approximately 21% upside from current levels. The brokerage cited the profitability beat and gross-margin recovery while acknowledging pricing competition from quick-commerce platforms as a key near-term risk.

Competitive Challenges and Growth Concerns

Post-quarterly results analysis from multiple brokerages highlighted several challenges facing Avenue Supermarts. The muted same-store growth of 5.6% has raised questions about the company's ability to maintain its growth trajectory in an increasingly competitive retail environment.

Key concerns identified by analysts include:

• Intensifying competition from quick-commerce platforms
• Sustainability of recent margin improvements
• Subdued like-for-like growth trends
• Upcoming CEO transition impact on operations

Despite these concerns, the stock has gained approximately 11% over the past year, reflecting investor confidence in the company's long-term retail strategy and market position in the organized retail sector.