PL Capital stays cautious on DMart, flags rich valuation and quick-commerce pressure; target Rs 4,103
PL Capital maintains 'Hold' with negative bias on Avenue Supermarts, citing 73.1x FY28E EPS valuation, deteriorating store metrics (sales/store -3.7%, bills/store/day -5.1%), quick-commerce eroding metro stores, and DMart Ready exiting 14 cities. Sees ~75 store adds in FY27/FY28 but pressured EBITDA margins of 7.0-7.4%.
What happened
PL Capital maintains 'Hold' on DMart with negative bias citing rich valuations, quick-commerce competition denting metro stores, deteriorating store metrics,
Key facts
- 73.1x FY28E EPS
- 58 stores added Q4
- sales/store -3.7%
- sales/ft -3.0%
- bill cuts +13.4% YoY
- bills/store/day -5.1%
- Rs 1,000 crore NCD
- debt ~Rs 2,500 crore
- EBITDA margin 7.4/7.0% FY27/FY28
- EPS CAGR 10.7% FY26-28
- target Rs 4,103
- ~75 store additions FY27/FY28
Why this matters
Quick-commerce competition and the DMart Ready retreat expose structural gaps that could open the door to partnerships, acquisitions, or capability builds in last-mile and online fulfillment.
What to watch
- Q-o-q sales/store and bills/store/day trend reversal or further deterioration
- EBITDA margin holding vs slipping below the 7.0% floor
- Actual store addition pace vs the ~75 store guidance
- DMart Ready city footprint and any further exits or re-entries
- Quick-commerce market share data in metro grocery
- Other brokerages recalibrate targets around the Rs 4,100-4,500 band, testing consensus on FY27/FY28 store-add cadence
- Management commentary emphasizes DMart Ready restructuring rationale and metro vs non-metro mix shift
- Increased scrutiny on per-store SSSG and gross margin trajectory in next quarterly print
- Quick-commerce players intensify grocery discounting in metros, pressuring DMart urban clusters