Goldman Sachs has reiterated its 'Sell' rating on Avenue Supermarts, the operator of D-Mart retail chain, while setting a price target of ₹3,500 per share. The investment bank's maintained stance reflects its cautious outlook on the company's stock performance.

Brokerage Recommendation Details

The following table summarizes Goldman Sachs' current recommendation:

Market Implications

The 'Sell' rating from Goldman Sachs indicates the brokerage's view that Avenue Supermarts shares may face headwinds or limited upside potential. This recommendation suggests that the investment bank believes the stock could underperform relative to broader market expectations or face downward pressure in the near term.

Avenue Supermarts operates the popular D-Mart retail chain across India, making it a significant player in the organized retail sector. Brokerage recommendations from major investment banks like Goldman Sachs are closely watched by institutional and retail investors as they make investment decisions.

Avenue Supermarts, the operator of the D-Mart retail chain, delivered a strong margin-led performance in Q3FY26, with EBITDA growth significantly outpacing analyst expectations. The company's consolidated EBITDA surged 20.2%, well above the projected 8-10% growth estimates. This robust performance was driven by improved operational efficiency and margin expansion across key metrics.

Financial Performance Highlights

The company's Q3FY26 results demonstrated strong profitability improvements across multiple parameters:

The improvement in consolidated EBITDA margins to 8.1% from 7.6% year-on-year was supported by gross margin expansion, which reached 15.3% compared to 14.7% in the same period last year. Management attributed the revenue growth impact partly to deflation in staples during the quarter.

Operational Metrics and Store Expansion

Avenue Supermarts maintained its expansion trajectory while managing operational efficiency. Sales per square foot stood at ₹9,290 compared to ₹9,317 in the previous year, while like-for-like growth for the quarter registered 5.6%. The company added 10 stores during Q3FY26, bringing the total store count to 442. This expansion represents 27 store additions in the first nine months of the financial year, demonstrating the company's continued focus on network growth.

Brokerage Recommendations and Price Targets

Analyst opinions on Avenue Supermarts remain divided following the quarterly results:

CLSA reiterated its positive stance and raised the price target to ₹6,185 per share, increasing FY26-28 consolidated earnings estimates by 1% to 7% to factor in stronger profit growth. However, Citi maintains a sell rating with a ₹3,150 price target, expressing concerns about the sustainability of recent margin expansion. The brokerage suggests that gross margin improvements may have been driven by one-off factors such as additional discounts from FMCG companies related to GST rate changes.

Nuvama holds a neutral view with a ₹4,351 price target, noting that DMart Ready's implied growth of around 20% year-on-year has revived sequentially. The brokerage highlighted that the sharper profit growth resulted largely from higher gross margins, expected to be driven by reduced discounting following GST rate cuts.

Market Performance and Analyst Coverage

Out of 29 analysts covering Avenue Supermarts, the recommendations are distributed as follows: eight have sell ratings, nine recommend buy, and twelve maintain hold ratings. The stock closed 0.45% higher at ₹3,807 on Friday and has gained 1.2% year-to-date. Citi noted that profit growth has lagged revenue growth in 10 of the last 12 quarters, largely due to competitive pressures and cost inflation, while highlighting potential challenges from rising competition in the quick commerce segment.