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Prabhudas Lilladher downgrades Avenue Supermarts to Reduce, cuts target price to Rs 3,214 from Rs 4,027
Our read
Avenue Supermarts will more likely than not post flat-to-weak per-store sales again before any recovery, so the lower target price is likely to hold through the next results.
For operators
Avenue Supermarts' sales per store fell 0.7% YoY and bills per store per day dropped 4.1% despite 76 store additions over three quarters, so rivals should defend visit frequency in catchments where quick commerce competes instead of relying on store count for growth.
Watch
Sales per store growth versus Q2 FY27's 0.7% decline
The report
Avenue Supermarts (D'Mart) saw Q2FY27 sales/store fall 0.7% YoY despite 76 store additions over three quarters. Prabhudas Lilladher cited quick-commerce competition and margin pressure as reasons for the downgrade.
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Reported figures
From the report. Source details below
| Bill cuts growth YoY: | 14.4% |
|---|---|
| Bills/store/day decline: | 4.1% |
| Current ROE: | 12.8% |
| EPS CAGR estimate FY26-29: | 13.2% |
Why it matters to operators and investors
Weakening per-store productivity at a scaled grocery leader suggests store-led expansion is yielding less, so underwriting of grocery assets should stress-test quick-commerce overlap and consider last-mile or dark-store partnerships over pure footprint growth.
What to watch next
- Bills per store per day decline below the 4.1% fall in Q2 FY27, at the Q3 FY27 results, would mean footfall is stabilising against quick commerce.
- Operating margin in the next results versus Q2 FY27
- Pace of store additions compared with the 76 over three quarters
- Rating or target price changes by other brokerages after Q2 FY27
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Avenue Supermarts is likely to keep adding stores after the 76 over three quarters, and to stress store maturity and like-for-like productivity in its commentary.
- Other brokerages are likely to revisit their targets and estimates after the Q2 FY27 per-store numbers, with some following the cut to ₹3,214.
- Quick-commerce rivals are likely to keep widening grocery assortments and delivery coverage in D'Mart's catchments, which keeps pressure on bills per store per day.
- Avenue Supermarts may lean harder on price competitiveness to defend footfall, at some cost to margins.
- Institutional investors may keep valuation multiples under pressure until per-store sales growth turns positive.
The source
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