Research house Geojit Investments has reiterated a BUY recommendation on Avenue Supermarts Ltd. (DMart), citing the company's accelerating store expansion, improving same-store sales momentum, resilient operating performance, and long-term growth visibility. Despite rising competition from quick-commerce platforms, Geojit believes DMart's disciplined execution, aggressive physical network expansion, and value-focused retail strategy position it for sustained earnings growth. The brokerage has maintained a 12-month target price of Rs. 5,063, implying an upside of nearly 17% from the current market price of Rs. 4,328. While rapid expansion could temporarily pressure inventory and debt metrics, analysts remain confident that DMart's scalable business model and operational consistency justify premium valuations.

Geojit Maintains BUY Call as DMart Accelerates Expansion Strategy

Geojit Investments has reaffirmed its BUY rating on Avenue Supermarts Ltd., the operator of India's largest and most profitable supermarket chain, DMart. The brokerage has fixed a target price of Rs. 5,063, representing an expected return of approximately 17% over the next 12 months from the current market price of Rs. 4,328.

The recommendation is driven by the retailer's consistent execution, aggressive store rollout, resilient consumer demand, and long-term confidence in its scalable business model. According to the brokerage, DMart continues to demonstrate its ability to balance rapid expansion while maintaining operational discipline.

Revenue Growth Reaches Fastest Pace in Eight Quarters

DMart delivered an impressive operational performance during the fourth quarter of FY26.

Revenue increased 19% year-on-year to Rs. 17,205 crore, marking the company's strongest quarterly sales growth in nearly two years. The growth was supported by healthy festive demand, robust customer footfalls, and continued store expansion across India.

One of the most encouraging indicators was the acceleration in like-for-like sales growth.

Stores operating for more than 24 months reported 10.8% same-store sales growth, compared with 8.1% during the corresponding quarter last year. This represents the strongest comparable-store performance recorded in the past two years and reflects improving consumer spending trends.

Operating Margins Continue to Improve

The company's profitability also strengthened despite its aggressive expansion strategy.

EBITDA climbed 26% year-on-year to Rs. 1,232 crore, while EBITDA margin expanded by nearly 40 basis points to 7.2%.

Improved gross margins combined with disciplined operating cost management helped support profitability even as the retailer continued investing heavily in new store openings.

Meanwhile,

Adjusted profit after tax increased 17% year-on-year to Rs. 725 crore, highlighting the company's ability to convert higher revenues into sustainable earnings growth.

Record Store Additions Strengthen Long-Term Growth Visibility

Perhaps the most significant development during the quarter was the company's aggressive expansion programme.

DMart crossed an important milestone by operating more than 500 stores nationwide.

The company opened a record 58 stores during the quarter, while total additions for FY26 reached 85 stores compared with 50 stores in FY25.

Management continues to prioritize expansion across Tier-2 and Tier-3 micro-markets where organized retail penetration remains relatively low and long-term consumption opportunities remain attractive.

According to Geojit, this physical expansion remains DMart's strongest competitive advantage against rapidly growing quick-commerce platforms.

DMart Ready Continues Measured Digital Expansion

Alongside its brick-and-mortar strategy, DMart continues strengthening its omnichannel capabilities.

DMart Ready currently operates across 18 cities, with management increasingly emphasizing home delivery while concentrating operations within high-potential metropolitan markets.

Rather than pursuing aggressive nationwide digital expansion, the company continues adopting a disciplined approach that prioritizes operational efficiency and profitability.

This measured strategy allows DMart to complement its physical retail network without compromising its everyday-low-price positioning.

Operational Metrics Reflect Healthy Consumer Activity

Several operating indicators highlighted continued improvement in customer engagement.

Among the key operational achievements:

Although annual revenue per square foot declined marginally, Geojit believes the reduction reflects rapid network expansion rather than any deterioration in store productivity.

Growth Investments May Temporarily Affect Balance Sheet

Geojit acknowledges that accelerated store additions will temporarily increase inventory levels and modestly raise debt requirements over the next few years.

However, these investments are viewed as strategic rather than structural concerns.

The brokerage expects the company's disciplined inventory management, efficient capital allocation, and stable cash generation to comfortably support the expansion programme.

Importantly, DMart is expected to preserve its hallmark everyday-low-discount pricing strategy despite higher investments.

Valuation Remains Premium but Supported by Execution

DMart continues to command premium market valuations owing to its consistent execution track record.

The stock currently trades at nearly 71 times one-year forward earnings, slightly below its three-year average valuation multiple of 76 times.

Geojit values the company at approximately 70 times FY28 estimated earnings per share to derive its target price of Rs. 5,063.

Although earnings estimates for FY27 have been marginally revised lower following the latest quarterly results, analysts continue expecting healthy long-term earnings expansion driven primarily by store additions.

Forecasts indicate:

Investment Outlook

Geojit's investment thesis remains centered on DMart's long runway for store-led expansion, improving consumer demand, and unmatched execution capability within India's organized retail sector.

While quick-commerce competition continues intensifying, the brokerage believes DMart's aggressive physical expansion, expanding footprint across underserved markets, improving same-store sales, and disciplined omnichannel strategy collectively provide a durable competitive advantage.