Some brokerages remain optimistic, backing DMart’s long-term growth potential, robust store economics, and the prospect of recovery in high-margin segments such as general merchandise and apparel. Others, however, remain cautious, flagging persistent margin pressures and mounting competitive intensity from both offline peers and quick commerce platforms.
Despite healthy revenue growth of 16% and a like-for-like (LFL) sales increase of 7.1%, analysts highlighted the continued erosion in gross margins—marking the fifth straight quarter of margin compression, as a key concern.
CLSA: Most bullish with Rs 5,466 target
CLSA has the most optimistic outlook on DMart, assigning it a target price of Rs 5,466 and an “accumulate” rating.
Axis Securities: Recovery likely in H2, target at Rs 4,810
Axis Securities maintained its ‘buy’ rating with a target price of Rs 4,810, the second highest among peers. While acknowledging margin contraction of 74 basis points to 7.9% in Q1, the brokerage expects a recovery in the second half of FY26, aided by festive demand, stabilising macro conditions, and efforts to revive the General Merchandise & Apparel (GM&A) segment.
Motilal Oswal: Strong long-term story, but trims estimates
Motilal Oswal reiterated its ‘buy’ call but lowered the target to Rs 4,500 from Rs 4,800, citing margin pressures and higher operating costs.“We cut our FY26-28E EBITDA by ~2-3% due to lingering pressure on GM and rising CoR,” the brokerage said, adding that competitive intensity in FMCG and quick commerce will weigh on near-term performance. However, the brokerage remains confident in DMart’s superior store economics and long-term competitiveness.
JP Morgan: Margin weakness to persist
JP Morgan maintained its ‘neutral’ rating with a target price of Rs 4,150, flagging ongoing margin stress due to a 30 basis point decline in gross margin and sustained pricing pressure in the FMCG segment.
The brokerage also cited rising entry-level wages and continued investments in capacity and service levels as additional drags. While the brokerage remains constructive on DMart’s execution and store expansion, it expects the stock to trade sideways in the near term, absent a clear margin recovery.
Nuvama: Cautious on margin trend, trims PAT estimates
Nuvama maintained a ‘hold’ rating and cut its target price to Rs 4,086, citing ongoing competitive pressures. “We estimate margin pressure shall continue given the sustained competition within the FMCG space,” the brokerage said. While top-line growth was robust, EBITDA margin dropped 66 bps due to wage inflation and higher service investments.
HSBC: Value proposition under threat, target price hiked
HSBC Global Research kept its ‘reduce’ rating but marginally raised the target to Rs 3,600, stating, “DMART’s EBITDA margin showed yoy decline for the fifth consecutive quarter as competitive pressures continue.” The brokerage flagged a diminishing value proposition due to quick commerce, saying, “intense competition has presented a challenge for DMART—it has become a trade-off between SSSG and margin stability.”
PL Capital: Hold on limited upside, target price slashed
PL Capital also maintained a ‘hold’ rating and revised its target down to Rs 3,923. The brokerage warned of continued margin headwinds due to e-commerce and quick commerce competition, combined with higher overheads and a soft demand environment. “We cut our FY26/FY27 EPS estimates by 1.0%/1.9%… maintain Hold,” the brokerage said.
Kotak Institutional Equities: Most bearish with target of Rs 3,450
Kotak retained its ‘sell’ rating with a target price of Rs 3,450, calling the 16.3% revenue growth “tepid.” The brokerage flagged “continued price competition in the FMCG category” and “higher-than-expected costs,” resulting in a sharp EBITDA margin decline.
“We retain a cautious stance on the stock in view of the expensive valuations and rising competitive intensity,” the brokerage said.
Buy for the long term or wait for better entry?
While brokerages like CLSA, Axis Securities and Motilal Oswal remain bullish, betting on DMart’s scalability and long-term positioning, others such as Kotak, HSBC and PL Capital are wary of structural margin challenges and rich valuations.
The stock currently trades around Rs 4,040.60, down 0.6% on Monday. With Q1 showing stable revenue growth but further margin compression, investors face a choice: ride the long-term consumption story or wait for more clarity as competitive dynamics evolve.
Also read | DMart shares tumble nearly 3% after Q1 results. Should you buy, sell or hold?
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
