Avenue Supermarts
Lowest-cost grocer; LFL normalising
- Last close
- ₹3,750.00
- 29 Sept 2026 · reference
- 1D · 1M
- −1.4% · −2.1%
- price-only
- Weight
- 1.3%
- 31 Jul 2026 · Aug rank 23
- Thesis review
- 8 Sep 2026
- Why We Own, p61
Approved description
Avenue Supermarts runs DMart, India's largest listed value grocery/general-merchandise chain with 503 owned stores as of 30-Jun-2026 (500 at Mar-2026; record 85 added in FY26) and FY26 revenue Rs 68,821 cr (+16%). Sales mix in Q1FY27: food 54.9%, non-food FMCG 19.6%, general merchandise & apparel 25.5%. DMart Ready (e-commerce) operates in 11 cities after exiting 7. Management sees room for 2,000-2,200 stores long term and targets 10-15% annual network growth.
- 01Store engine accelerating: record 85 stores added in FY26 (500 total), management now targets 10-15% network growth and 2,000-2,200 stores long-term vs 503 today; FY26 revenue +16%, Q1FY27 +14.9%.
- 02Buoyant's published view: the weak Q1FY27 LFL (5.5%, metros flat) was partly a temporary supply/discount distortion as quick-commerce players pushed volumes around the Zepto IPO; Q4FY26 LFL had been 10.8%, so normalisation is the base case (per Buoyant Capital note supplied by the PMS; not independently located online).
- 03Margins resilient: EBITDA margin 8.0% (+10bp) and gross margin +50bp in Q1FY27 as general merchandise/apparel rose to 25.5% of sales; consensus models 17.6% p.a. earnings growth and ~14% ROE in 3 yrs.
- 04Non-metros still growing well and 80%+ of quick-commerce GMV is metro-concentrated (Redseer), so most of DMart's future store pipeline sits outside the q-commerce battleground.
- 05Balance sheet: near debt-free (borrowings Rs 2,425 cr vs equity Rs 24,464 cr, mostly leases), promoter holding 74.5%, self-funded expansion; DMart Ready losses (Rs 91 cr/qtr) being curtailed by exiting 7 cities.
Reference close, with results-period markers
- 1Q Sep-25 end · 30 Sept 2025
- 2Q Dec-25 end · 31 Dec 2025
- 3Q Mar-26 end · 31 Mar 2026
- 4Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Net Sales | 18,795 | +14.9% | +6.3% |
| Operating Profit | 1,499 | +15.4% | +23.8% |
| Net Profit | 861 | +11.4% | +31.1% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
General industrial/consumer/IT preset: growth, margins, ROCE/ROIC, working capital, FCF, net debt; P/E, EV/EBITDA.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Valuation range
No headline target on this page; the book quotes the thesis and the risk rather than a target.
What we watch
- Q2FY27 business update (early Oct-2026) and results (mid-Oct-2026): LFL recovery toward 8-10% would validate the 'temporary distortion' thesis.
- FY27 store additions tracking 10-15% network growth (i.e. 50-75+ stores) with H2 skew.
- Zepto IPO pricing/post-listing discipline on discounts (targeted 2026 listing) reducing subsidy intensity in metro grocery.
- Quick-commerce share loss in metros persists beyond the IPO-period distortion: metro older stores flat YoY in Q1FY27 and revenue/sq ft falling; Goldman/Citi flag this as structural.
- Valuation: ~57x FY28E consensus EPS leaves no room for LFL or margin disappointment; stock fell 8% in 2 days after the Q1 update.
- Cost inflation: staff costs +30% YoY in Q1FY27 capped EBITDA expansion; only 3 stores added in Q1 vs 85 in FY26 (seasonal but watch FY27 pace).