Another DMart bear cuts its price target, earnings estimates as discounts rise – CNBC TV18
The price target on Avenue Supermarts has been cut to ₹3,425 from ₹4,000 earlier by Goldman Sachs. The revised price target implies a further downside potential of 10% from Tuesday’s closing levels.
Shares of Avenue Supermarts have already corrected by 30% from their recent record high level of ₹5,484.
Goldman Sachs believes that D-Mart’s competitive moat is facing increasing pressure and the store chain is resorting to increasing price discounts in order to maintain its competitive advantage.
The brokerage further said that D-Mart’s addressable market is only 1/5th of India’s $500 billion market and that its growth headroom is now outside of the country’s top 10 cities.
As a result of rising competitive pressures and headwinds, Goldman Sachs has cut Avenue Supermarts’ earnings estimates for financial year 2025, 2026 and 2027 by 4.2%, 6.2% and 6.1% respectively.
The earnings estimates have been cut by Goldman Sachs to account for lower revenue growth going forward.
In a note released last week, IIFL Securities had also highlighted similar concerns, stating that DMart is no longer the go-to destination for the most affordable daily groceries.
Out of the 29 analysts that have coverage on Avenue Supermarts, 13 of them have a “sell” or equivalent rating on the stock, seven of them say “buy”, while the other nine have a “hold” rating.
Shares of Avenue Supermarts ended 0.4% lower on Tuesday at ₹3,813. The stock is down 6.2% so far for the year.
