DMart shares slump up to 6% post Q3: Should you buy, sell or hold it?

Avenue Supermarts, the parent company of diversified retail chain DMart, reported its financial results for the October-December period over the weekend. For the third quarter of the current financial year, the company's consolidated net profit came in at Rs 724 crore, marking an increase of 4.8 per cent over the corresponding period a year ago. Mumbai-headquartered DMart's revenue grew 17.7 per cent to Rs 15,973 crore, according to a regulatory filing. 

DMart's net profit fell short of analysts' expectations though its revenue met the mark. According to Zee Business research, DMart was expected to report a net profit of Rs 832 crore and revenue of Rs 15,683 crore for the third quarter of the current financial year. 

DMart logged Rs 1,218 crore in quarterly earnings before interest, taxes, depreciation and amortisation (EBITDA), up 8.8 per cent on a year-on-year basis.

Its margin, a key measure of profitability, decreased by 60 basis points (bps) to 7.6 per cent.

Zee Business analysts had pegged DMart's quarterly EBITDA at Rs 1,290 crore and margin at 8.2 per cent. 

Here's what global brokerages make of DMart's Q3FY25 results

JPMorgan reiterated its 'neutral' stance on the counter with the slashed target price of Rs 4,150- implying healthy gains of nearly 13 per cent from the previous close. The brokerage pointed out that DMart's Q3 EBITDA/PAT was 3 per cent/ 5 per cent below its estimates on account of higher-than-expected employee/other expenses. Gross margin was broadly flat sequentially as well as on-year despite an adverse mix (share of foods rose on-year in Q3). It also highlighted the appointment of Anshul Asawa as CEO designate was an important development. 

Citi has also continued with its earlier 'sell' call with the target reduced to Rs 3,350, implying potential downside of over 9 per cent from the last close. The brokerage said despite an improvement in same-store sales growth SSG (from 5.5 per cent in 2Q to 8.3 per cent in 3Q); EBITDA/PAT was missed. Also, it underlined that Neville Noronha will step down in Jan’26.

Meanwhile, another brokerage Bernstein remained bullish on the retail stock, pegging the target at Rs 5,800 per share- meaning over 57 per cent potential gains from the scrip. The global brokerage said the company delivered a positive Q3FY25 even though expectations remained low. Further, it pointed out that the decline in the Q3 EBITDA and PAT margin was on account of a higher grocery share. Bernstein underscored that same-store sales growth seems to stage recovery, nonetheless it may be seasonal. It expects limited SSG improvement over the next one or two quarters.

Weakness in FMCG share will continue & grocery will keep gaining as key strength, it added.