share price declined more than 4% in morning trade on the BSE on Monday, 12 October, after the company reported its September quarter (Q2FY27) results. DMart share price opened at ₹3,405 against its previous close of ₹3,520 and dropped 4.4% to hit a 52-week low of ₹3,366.
Why is DMart stock down?
Shares of Radhakishan Damani-led Avenue Supermarts declined on Monday after the company reported a modest 8.5% year-on-year (YoY) rise in its Q2FY27 consolidated to ₹742.98 crore. Total income rose almost 18% YoY to ₹19,657.50 crore.
Margins declined during the quarter as expenses increased faster than revenue.
Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) increased 14.7% YoY to ₹1,393 crore in Q2 FY27, while EBITDA margin contracted to 7.1% from 7.3% in the year-ago quarter. Consolidated profit after tax (PAT) margin also declined to 3.8% from 4.1%.
Avenue Supermarts share price trend
The stock looks set to extend losses for the third consecutive session. Year-to-date, DMart shares are down 9% compared to a 15% fall in the equity benchmark Sensex. However, on a shorter timeframe of six months, the stock’s fall is bigger at 23%, compared to a 7% loss in the Sensex.
On a monthly scale, the stock has been down since July. So far in October, it is down 11%.
At the current market price of ₹3,366, the stock is down 27.5% from its 52-week high of ₹4,642, scaled on 17 April this year.
Is it the right time to buy the stock?
Experts have mixed views on the stock following the September-quarter results. Some of them have reduced their target prices, citing lower-than-expected Q2 prints.
Brokerage firm Emkay Global Financial Services has a “Sell” view on the stock with a reduced target price of ₹3,300.
“We maintain a ‘sell’ on DMart, as we reduce our target price by nearly 10% to
₹3,300 from ₹3,700 earlier, given slow TAM (total addressable market) expansion, deteriorating ROIC (return on invested capital), moderating earnings growth, and increasing debt,” said Emkay.
Emkay underscored that after reporting nearly 18% topline growth, DMart saw muted PAT growth of nearly 8% in Q2, which was 14% and 8% lower than Emkay’s and Street estimates, respectively.
Brokerage firm Motilal Oswal Financial Services has maintained its “neutral” view on the stock, reducing the target price to ₹3,925 from ₹4,000 earlier.
Motilal Oswal said while the quick commerce dent remains concentrated in dense metro catchments for now, the overall discounting and customer acquisition intensity are unlikely to moderate in the near term and could weigh on DMart’s growth and margins over the medium term.
The brokerage firm has trimmed its FY27-28 EBITDA and PAT estimates by 1-3%.
“We model a CAGR of 16-17% across DMart’s consolidated revenue, EBITDA, and PAT over FY26-29E, driven by nearly 15% CAGR in area additions and mid-single-digit like-for-like growth,” said Motilal Oswal.
On the technical front, DMart stock has breached its major bullish trendline on the monthly chart, indicating a weakening of the stock’s long-term price structure.
Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers, underscored that the monthly Relative Strength Index (RSI) is trading below the crucial 50 mark, reflecting a loss of bullish momentum and suggesting that selling pressure continues to dominate the broader trend.
Patel believes the technical outlook remains cautious until the stock shows convincing signs of strength.
“As long as the stock remains below this momentum threshold, investors should exercise caution while considering fresh positions. The immediate support zone is placed at ₹3,300, which will be crucial for the stock to maintain price stability. On the upside, ₹3,500 is the key resistance level. A decisive move above this resistance could improve the near-term outlook, while a sustained break below ₹3,300 may intensify selling pressure,” said Patel.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.