DMart Shares Plunge 6.7% as Citi, Goldman Retain Sell Ratings

Shares of Avenue Supermarts, the operator of DMart, fell 6.7% on October 5, marking the company’s sharpest single-day decline in nearly two years. The sell-off came despite an 18.4% year-over-year increase in standalone revenue for the September quarter, as investors focused on valuation, store productivity and rising competition from quick-commerce platforms.

Avenue Supermarts closed at ₹3,555 after Citi and Goldman Sachs retained their Sell ratings on the stock. Citi maintained a target price of ₹3,300, while Goldman Sachs retained its ₹3,800 target. Both brokerages argued that DMart’s current valuation leaves limited room for slower growth, while competition from Blinkit, Swiggy and other organised retailers could put further pressure on same-store sales.

Key takeaways

• DMart shares fell 6.7% to close at ₹3,555 on October 5.
• It was the stock’s steepest one-day decline since October 14, 2024.
• Q2 FY27 standalone revenue rose 18.4% YoY to ₹19,206 crore.
• Revenue growth accelerated from 15.1% in Q1 FY27.
• DMart added 15 stores in Q2, taking the network to 518.
• However, H1 store additions were only 18 versus 17 a year earlier.
• Citi retained a Sell rating with a ₹3,300 target.
• Goldman Sachs retained a Sell rating with a ₹3,800 target.
• Citi highlighted a valuation of about 61 times estimated FY28 earnings.
• Goldman expects revenue growth to moderate below 20% as competition intensifies.
• The full Q2 profit and margin numbers are due on October 10.

Why DMart shares fell despite 18.4% revenue growth

At first glance, DMart’s Q2 business update looked strong.

Standalone revenue from operations rose 18.4% to ₹19,206.18 crore from ₹16,218.79 crore a year earlier. Growth also accelerated from 15.1% in Q1 FY27, suggesting that the company’s top-line momentum had improved.

Yet the market sold the stock aggressively.

The reason is that investors are looking beyond absolute revenue growth. DMart has historically commanded a premium valuation because of its strong store economics, cost-conscious business model and long-term expansion opportunity.

That premium becomes harder to justify if revenue growth slows, mature stores become less productive or the company needs to spend more to defend market share.

The latest sell-off therefore reflects a debate over the quality and sustainability of DMart’s growth, rather than simply whether sales are increasing.

Citi’s concern: valuation versus growth

Citi retained its Sell rating and ₹3,300 target price.

The brokerage estimates that Avenue Supermarts is trading at roughly 61 times estimated FY28 earnings.

That is a demanding valuation for a retailer facing increasing competitive pressure.

Citi’s argument is not that DMart’s business is fundamentally weak. Instead, the concern is that the market valuation already assumes a substantial amount of future growth.

For that valuation to remain supported, DMart needs to demonstrate sustained store expansion and better throughput, meaning stronger sales generated by its existing and newly opened stores.

Citi specifically highlighted the need for accelerated store expansion and improved throughput to support the company’s valuation multiple.

The issue is that DMart’s store additions have not accelerated materially on a first-half basis.

Store additions tell a different story

Avenue Supermarts added 15 stores during Q2 FY27, taking its total network to 518 stores as of September 30.

That initially looks encouraging because the company had added only eight stores during the corresponding quarter last year.

But the first-half comparison is less impressive.

DMart added 18 stores in H1 FY27, compared with 17 stores in H1 FY26.

In other words, the company added only one more store than it did during the first six months of the previous financial year.

This matters because DMart’s growth model depends heavily on expanding its physical network.

DMart’s store expansion

Metric	Q2 FY27 / Sept. 2026	Comparison
Stores at quarter-end	518	+20% YoY
Q2 store additions	15	vs 8 in Q2 FY26
H1 FY27 additions	18	vs 17 in H1 FY26
Q2 revenue	₹19,206 crore	+18.4% YoY
Q1 FY27 revenue	₹18,343 crore	Q2 +4.7% sequentially

The distinction between quarterly and half-year additions is important.

The Q2 acceleration is real, but the H1 numbers indicate that DMart has not yet demonstrated a major increase in its overall pace of expansion.

Goldman Sachs sees growth slowing below 20%

Goldman Sachs has retained its Sell rating with a ₹3,800 target price.

Its concern is centred on a mismatch between DMart’s growth outlook and its valuation.

Goldman expects Avenue Supermarts’ revenue growth to moderate to below 20% going forward, compared with earlier expectations of around 30%.

That is a significant change in the assumptions underpinning the investment case.

The brokerage points to increasing competition in India’s retail market, particularly in major cities.

Quick-commerce platforms such as Blinkit and Swiggy are competing aggressively for grocery and household purchases, while large organised retailers such as Reliance are also expanding their presence.

The result could be slower same-store sales growth for established DMart outlets.

Quick commerce is changing the retail equation

DMart’s traditional advantage has been its ability to offer everyday products at competitive prices through large-format stores.

But quick commerce has changed consumer expectations.

Consumers in major cities can now order groceries, household products and other frequently purchased items within minutes through platforms such as Blinkit and Swiggy.

That does not make DMart’s physical stores obsolete.

The company still has advantages in scale, sourcing and offline retail economics.

But the competitive environment has changed.

A customer who previously travelled to a DMart store for a relatively small basket of products now has an alternative that prioritises convenience and speed.

This is particularly relevant for mature stores in densely populated urban markets.

Same-store sales are becoming the key metric

Revenue growth alone does not tell investors how efficiently DMart’s existing network is performing.

The more important measure is same-store sales growth, which tracks sales growth from stores that have been operational long enough to make a meaningful year-over-year comparison.

DMart’s same-store growth has been inconsistent.

The company reported 5.5% growth in Q1 FY27 for stores older than two years, a level that had already raised concerns among analysts.

Brokerages expected Q2 same-store growth to improve into the mid-to-high single digits, but the complete quarterly results are needed to confirm the number.

This is important because a large retailer can produce strong overall revenue growth simply by opening many new stores.

If existing stores are growing slowly, however, the long-term economics of the network can become less attractive.

The valuation makes small disappointments more painful

DMart’s premium valuation is one of the central reasons the stock reacted so strongly to the brokerage reports.

When a stock trades at a relatively high earnings multiple, investors generally expect consistent growth.

A small deterioration in growth expectations can therefore produce a disproportionately large share-price reaction.

This is what appears to have happened with Avenue Supermarts.

The company delivered 18.4% revenue growth, but that was not enough to overcome concerns that future growth could settle below the levels previously expected.

Business Standard reported that Avenue’s revenue growth had ranged between 13% and 19% over the preceding four quarters, highlighting the volatility in the growth trajectory.

Goldman therefore sees a potential mismatch between the company’s expected growth rate and the valuation investors are paying for it.

Q2 revenue was actually better than expected

The negative market reaction should not obscure the fact that DMart’s Q2 revenue performance was relatively strong.

Revenue increased 18.4% year over year to ₹19,206.18 crore.

It was also 4.7% higher than the ₹18,343.49 crore reported in Q1 FY27.

According to brokerage commentary cited by Moneycontrol, Q2 revenue was around 1.2% above CLSA’s estimate and 1.1% above consensus.

That means the immediate problem was not a major revenue miss.

Instead, the market is assigning greater importance to what happens next.

The question is whether DMart can maintain close to 20% revenue growth while expanding stores, defending its market position and preserving margins.

Inflation and pricing also matter

Another reason investors are examining the composition of revenue growth is the role of pricing.

Business Standard reported that analysts believed part of the Q2 acceleration could have been supported by price increases in fast-moving consumer goods and general inflation in other categories.

Lower discounting intensity from quick-commerce competitors may also have helped.

That creates an important distinction between nominal revenue growth and underlying volume growth.

If customers are buying significantly more products, revenue growth is a stronger signal of expanding demand.

If a larger portion of revenue growth comes from higher prices, the underlying increase in volumes may be weaker.

The complete Q2 results should provide greater clarity on gross margins, operating profit and profitability.

October 10 will be the next major test

The October 5 sell-off occurred before DMart reported its complete Q2 financial results.

Avenue Supermarts has scheduled its board meeting for October 10 to consider the standalone and consolidated financial results for the quarter and half year ended September 30.

That announcement will give investors information that was missing from the preliminary business update.

The most important numbers will include:

• Revenue growth
• Same-store sales growth
• Gross margin
• EBITDA and EBITDA margin
• Net profit growth
• Expense growth
• Store-level productivity
• DMart Ready performance

These figures could either reinforce the cautious brokerage view or provide evidence that the market’s concerns have become excessive.

DMart Ready remains part of the competitive equation

Avenue Supermarts also operates DMart Ready, its online grocery and delivery business.

The digital operation is strategically relevant because the competitive threat from quick commerce is not limited to physical stores.

Blinkit, Swiggy Instamart, Zepto and other digital platforms have invested heavily in delivery infrastructure and dark-store networks.

DMart Ready gives Avenue a digital channel through which it can participate in the changing shopping behaviour of urban consumers.

However, investors need to consider the economics of online retail separately from the highly efficient large-format store model.

Online grocery can involve additional fulfilment and delivery costs, meaning sales growth does not automatically translate into the same profitability profile as a physical store.

The market is not uniformly bearish

The sharp decline should not be interpreted as a consensus view that DMart’s business is deteriorating.

Brokerage opinions remain sharply divided.

Citi has a Sell rating with a ₹3,300 target.

Goldman Sachs also has a Sell rating, with a ₹3,800 target.

At the other end of the spectrum, CLSA has maintained a High Conviction Outperform rating with a ₹5,723 target, while Bernstein has an Outperform rating and a ₹5,000 target.

This enormous gap between targets shows how differently analysts value DMart’s long-term growth potential.

The bullish argument is essentially that DMart’s store network, sourcing capabilities and consumer proposition can continue producing strong long-term growth despite near-term competitive pressure.

The bearish argument is that the market is already paying a premium for that growth, leaving limited upside if growth settles below expectations.

What investors should watch next

The next few quarters will be less about headline revenue and more about the economics behind that revenue.

The first indicator is same-store sales growth.

If mature stores can consistently deliver high-single-digit growth, concerns about competitive pressure could ease.

The second is store expansion.

DMart needs to demonstrate that it can accelerate its store additions without compromising returns.

The third is margins.

If competition forces greater discounting, profitability could come under pressure even when revenue remains strong.

The fourth is quick-commerce intensity.

If customers increasingly shift small and frequent purchases toward rapid-delivery platforms, DMart’s urban store productivity could face additional pressure.

Finally, valuation will remain important.

Even if DMart continues to grow faster than many traditional retailers, investors must determine whether that growth is sufficient to justify a premium earnings multiple.

What the 6.7% fall really means

The sharp fall in DMart shares is best understood as a valuation reset rather than a sudden deterioration in the business.

The company has delivered 18.4% Q2 revenue growth and expanded its store network to 518 outlets.

Those are not weak numbers.

But the market had already assigned DMart a high valuation based on expectations of sustained strong growth.

Citi and Goldman are effectively arguing that those expectations are becoming harder to justify because store expansion has not accelerated substantially, same-store growth remains uneven and quick commerce is intensifying competition.

That explains why a seemingly strong revenue update could be followed by one of the stock’s biggest one-day declines in years.

Frequently asked questions

Why did DMart shares fall 6.7% despite strong Q2 revenue growth?

Investors focused on the sustainability of future growth rather than the headline Q2 number. Citi and Goldman Sachs cited high valuation, uncertain same-store growth and rising competition from quick-commerce platforms.

What are Citi and Goldman Sachs’ DMart targets?

Citi retained its Sell rating with a ₹3,300 target, while Goldman Sachs retained its Sell rating with a ₹3,800 target.

How much did DMart’s Q2 revenue grow?

Avenue Supermarts reported standalone revenue from operations of ₹19,206.18 crore for Q2 FY27, up 18.4% from ₹16,218.79 crore a year earlier.

How many DMart stores are there?

Avenue Supermarts had 518 stores as of September 30, 2026. One of those stores, in Sanpada, Navi Mumbai, was closed to customers for reconstruction.

The Bigger Picture

DMart’s latest sell-off highlights a broader change in India’s organised retail market. The company is still delivering strong double-digit revenue growth, but investors are increasingly asking whether its mature stores can maintain that momentum while quick-commerce platforms compete aggressively for everyday purchases.

The central issue is therefore not whether DMart is growing. It is whether the pace and quality of that growth are sufficient to justify a premium valuation. The October 10 results, particularly same-store sales, margins and profitability, should provide a much clearer answer.

Looking Ahead

The next major catalyst is Avenue Supermarts’ full Q2 FY27 financial results. Strong margins and healthy same-store growth could challenge the bearish brokerage thesis, while weaker store productivity or margin pressure would reinforce concerns that DMart’s growth premium is becoming difficult to sustain.

For now, the 6.7% decline shows that the market is demanding more than revenue growth from India’s best-known value retailer. DMart will need to demonstrate stronger throughput, disciplined expansion and resilience against quick commerce if it is to regain the premium investors have historically assigned to the stock.