Dolat Capital Upgrades DMart to 'Accumulate', Lifts Target to Rs 4,580 Despite Soft Q1
Dolat Capital raised Avenue Supermarts to 'Accumulate' from 'Reduce', hiking its target to Rs 4,580 from Rs 4,395 after a ~12% stock correction over three months. Q1 saw revenue up 15.1% YoY and APAT up 12.8%, but EPS estimates were trimmed 7% for FY27/28. The bullish call rests on an expected 17% earnings CAGR over FY26-28E.
What happened
Dolat Capital upgraded DMart to 'Accumulate' from 'Reduce' with a higher target of Rs 4,580 despite a soft Q1 FY27 and trimmed EPS estimates, citing corrected
Key facts
- FY27/28 EPS cut 7/7%
- stock corrected ~12% in 3 months
- target price Rs 4,580 from Rs 4,395
- revenue +15.1% YoY
- gross profit +18.8% YoY
- Ebitda +16.3% YoY
- APAT +12.8% YoY
- earnings CAGR ~9% FY24-26
- 17% earnings CAGR FY26-28E
Why this matters
The three-month stock correction and trimmed EPS estimates suggest a window to accelerate store expansion and omnichannel moves while the market prices in tempered near-term expectations.
What to watch
- Q2 SSSG and gross margin print vs the 17% CAGR thesis
- Quick-commerce market share data in metro grocery
- Further EPS revisions from other brokerages (upgrade breadth)
- Management commentary on discretionary/general merchandise mix recovery
- Stock behavior at Rs 4,580 target as resistance/support
- Monitor peer brokerage reactions to gauge whether Dolat upgrade catalyzes consensus shift or stays isolated
- Track DMart Ready / e-commerce expansion commentary as defensive response to quick-commerce
- Watch for institutional accumulation flows near the corrected price level
- Assess store-addition cadence and same-store sales growth trajectory into next quarter