Avenue Supermarts stock opened Monday's trading session roughly 3 percent lower, a reaction to the DMart operator's second-quarter fiscal results, where profit margins came in below analyst estimates despite revenue and consumer demand both trending upward. Trading at around Rs 3,411 per share, the stock posted one of the steeper declines recorded across both the BSE 500 and NSE 500 on that session.

On Friday, DMart's stock lost 1.9 percent of its value, a drop that came before the company released its results. Through the first portion of 2026, the stock recorded a loss of 5.4 percent, a notably shallower retreat than the 13.9 percent drop posted by the Nifty 50 over the same stretch.

Consolidated net profit at Avenue Supermarts climbed to Rs 743.5 crore in Q2 FY27, reflecting an 8.5 percent gain over the same period a year earlier, while revenue for the quarter reached Rs 19,644 crore, up 17.8 percent. Operationally, the business posted a 15 percent lift in EBITDA to Rs 1,394 crore, even as the underlying margin slipped to 7 percent from the 7.3 percent recorded in the comparable period a year prior.

Quarterly figures showed the retailer's comparable-store sales rate climbing to 9.5 percent, with 15 new locations opening across the period to bring the chain's footprint to 518 shops in total.

Analyst opinion on DMart's trajectory remained split, with CLSA forecasting room for notable price gains while Citi held to a cautious view, pointing to flagging store-level output, mounting cost pressures, and the growing challenge posed by quick-commerce platforms.

CLSA set its price target for the stock at Rs 5,723 — a level that would represent an upside of around 63 percent from where shares closed on Friday — while maintaining an Outperform rating that the firm has placed among its most firmly held investment views. A 9.5 percent rise in like-for-like sales and a gross margin of 14.15 percent landed within the range the brokerage had anticipated. Narrowing wage legislation pushed the EBITDA margin down by 28 basis points, and net profit trailed EBITDA expansion as depreciation charges and finance costs each climbed over the period.

A Hold rating on the stock stayed in place at Jefferies, though the firm trimmed its target to Rs 4,000, pointing to margin pressures it saw persisting even as underlying demand held up. Among the concerns the brokerage raised were a shift toward higher-food-content product lines, pressure on gross margins, rising wage costs, and a build-up of inventory levels. Store productivity weakened over the period, while EBITDA per location dropped to its lowest point across several consecutive quarters. Earnings projections at Jefferies were trimmed by a margin of two to three percent.

A Neutral rating and a target price of Rs 3,925 were left in place by Motilal Oswal. Revenue growth at the company picked up pace, climbing to 18 percent in the second quarter from 15 percent in the first, while like-for-like growth moved from 5.5 percent to 9.5 percent over the same period. Locations carrying the brand's products numbered 15 by quarter's end, up from just three when the prior period closed. Both EBITDA and net profit came in below analyst forecasts, falling short by three percent and seven percent in turn.

Profitability, measured at the EBITDA level, narrowed by roughly 30 basis points, with softer gross margins and elevated retailing costs — entry-level wage inflation among them — bearing the bulk of the pressure.

A Sell rating held firm at Citi, which also trimmed its target price to Rs 3,250, pointing to ongoing pressure on profitability and a competitive landscape increasingly shaped by quick-commerce platforms. Revenue climbed 18 percent, yet standalone EBITDA and net profit each fell short of analyst forecasts — by 8 percent and 12 percent, respectively — according to the brokerage's assessment. Measured against the prior year, revenue per square foot edged up by 1.5 percent, whereas both EBITDA and profit before tax — on the same per-square-foot basis — moved in the opposite direction, falling 2.2 percent and 7.7 percent in turn.

In the first half of FY27, the free cash outflow at the company flagged by Citi stretched to Rs 1,640 crore, a position that had stood at Rs 320 crore in the comparable period a year prior. By the close of FY26, the company's gross debt had climbed to Rs 2,630 crore, up from Rs 970 crore recorded at the same point the previous fiscal year.

Across 11 of the 14 quarters the brokerage reviewed, profit growth lagged behind top-line expansion — a pattern the firm traced to three converging pressures: intensifying competition from quick-commerce players, a softening in other income, and a steady climb in interest obligations. Earnings projections spanning fiscal years 2027 through 2029 were trimmed by a margin of two to four percent.