Avenue Supermarts Ltd., the parent company of popular retail chain DMart, experienced a notable share price surge on Monday, with stocks jumping over 3% following the release of strong third quarter results for financial year 2026.

Strong Q3 FY26 Performance Drives Market Response

The company announced its Q3 FY26 results over the weekend, reporting a significant jump in profit compared to the previous period. This positive financial performance immediately translated into market gains, with investors responding favorably to the improved earnings metrics.

Market Reception and Investor Confidence

The strong market response to Avenue Supermarts' quarterly results demonstrates investor confidence in the company's operational performance and growth trajectory. The timing of the results announcement over the weekend allowed market participants to digest the positive financial data, leading to the immediate uptick in share price during Monday's trading session.

The retail sector has been closely watched by investors, and Avenue Supermarts' strong profit growth in Q3 FY26 appears to have reinforced positive sentiment around the company's business model and execution capabilities. The over 3% gain in share price reflects the market's appreciation of the company's financial performance during the quarter.

Avenue Supermarts, the parent company of retail chain DMart, delivered strong third-quarter results with consolidated profit after tax growing 18.3% year-on-year to ₹855.92 crore. The company's shares surged as much as 2.7% in early trade, reaching a day's high of ₹3,906.95 on the BSE following the earnings announcement.

Financial Performance Highlights

The company's financial metrics showed consistent improvement across key parameters during the third quarter:

The company's profitability improved significantly, with PAT margins expanding to 4.7% from 4.5% in the previous year. EBITDA margins also strengthened to 8.1%, compared to 7.6% in the same period last year, supported by strong cost control measures.

Store Expansion and Operational Updates

DMart continued its expansion strategy by adding 10 new stores during the quarter, bringing the total store count to 422. However, the company faced challenges with rising lease and depreciation costs due to a higher focus on rental properties. Same-store sales growth stood at 5.6%, while revenue per square foot remained flat during the period.

Gross margins expanded to 14.6%, representing a 50 basis points year-over-year improvement. This expansion was supported by reduced promotional intensity in FMCG products and GST cuts. Despite wage inflation and skilled workforce supply mismatches creating cost pressures, the company managed to achieve strong EBITDA growth through effective cost management.

E-commerce Vertical Performance

DMart Ready, the company's e-commerce vertical, experienced a deceleration in growth momentum. The platform's growth slowed to 20% from 25% in the previous year's third quarter. Additionally, DMart Ready reduced its operational presence from 25 cities to 19 cities year-over-year, reflecting a more cautious approach to scaling e-commerce operations.

Analyst Recommendations

Brokerage firms have provided mixed recommendations following the quarterly results:

Nuvama maintained its 'Hold' rating while reducing the target price, citing concerns over slowing top-line growth and widening losses at subsidiaries. Motilal Oswal reiterated its 'Buy' rating with an increased target price, emphasizing DMart's value-focused model and superior store economics. JM Financial maintained a 'Reduce' rating with a lowered target price, adjusting estimates based on slower store opening ramp-up and revised same-store sales growth projections.