Mumbai: Shares of Avenue Supermarts Ltd., the operator of the DMart retail chain, declined nearly 5 per cent in early trade on Friday after the company’s first-quarter business update fell short of market expectations. Investors reacted to slower revenue growth, a sharp decline in store additions and cautious commentary from several leading brokerages.

The stock was trading at Rs 4,014.90 on the NSE, down Rs 172 or 4.09 per cent from its previous close during the first hour of trading.

While the company continued to post double-digit revenue growth, analysts said the pace of expansion was weaker than anticipated, particularly after a strong finish to the previous financial year.

Revenue growth slows in first quarter

Avenue Supermarts reported standalone revenue from operations of Rs 18,343.49 crore for the quarter ended June 30, 2027, compared with Rs 15,932.12 crore in the corresponding quarter last year, registering a year-on-year growth of around 15 per cent.

Although the retailer maintained healthy double-digit growth, the figure marked a slowdown from the 19 per cent growth recorded in the January-March quarter.

On a sequential basis, revenue increased from Rs 17,205 crore reported in the fourth quarter, indicating continued business expansion but at a more moderate pace.

For the full financial year 2025-26, Avenue Supermarts reported revenue from operations of Rs 66,968 crore, reflecting its continued leadership in India’s organised retail sector.

Market participants, however, were expecting stronger growth amid improving consumer demand and higher inflation in the fast-moving consumer goods (FMCG) segment.

Store expansion loses momentum

One of the key concerns highlighted by analysts was the slower pace of store additions during the quarter.

The company ended June 2027 with 503 operational stores, including one outlet at Sanpada in Navi Mumbai that remains temporarily closed for reconstruction.

During the April-June quarter, Avenue Supermarts added only three new stores, a significant decline compared with the 58 stores added during the January-March quarter.

The retailer has expanded aggressively over the past few years, increasing its store network from 284 stores in FY22 to more than 500 stores by the end of FY26. However, the latest quarter’s modest additions have raised questions over the pace of future expansion.

Analysts believe store additions remain an important driver of long-term revenue growth and valuation for the company.

Brokerages remain cautious

Following the business update, several domestic and global brokerages reiterated cautious views on the stock.

Citi maintained its ‘Sell’ rating with a target price of Rs 3,650, citing risks to same-store sales growth and increasing competition from quick-commerce platforms. The brokerage believes sustained store expansion and improved throughput will be critical to supporting the company’s premium valuation.

Morgan Stanley retained its ‘Overweight’ recommendation with a target price of Rs 5,083, but acknowledged that the first-quarter performance was weaker than expected after a robust fourth quarter. The brokerage said investors would closely monitor operating margins and management commentary during the earnings announcement.

Macquarie maintained its ‘Underperform’ rating with a target price of Rs 3,100, stating that both sales growth and store additions were below expectations.

Goldman Sachs also retained its ‘Sell’ recommendation with a target price of Rs 4,000, noting that revenue growth slowed despite higher FMCG inflation and that store additions were relatively weak compared with previous years.

The mixed outlook from brokerages contributed to the selling pressure witnessed in the stock during Friday’s session.

Investors await quarterly earnings

Despite the weaker-than-expected business update, Avenue Supermarts continues to remain one of India’s largest and most profitable food and grocery retailers.

The company recently raised Rs 200 crore through the issuance of commercial papers, which are proposed to be listed on the BSE, strengthening its short-term funding position.

Investors are now awaiting the company’s detailed financial results, which are scheduled to be announced after the board meeting on July 11, 2026. The earnings report will provide greater clarity on profitability, operating margins, same-store sales growth and management’s outlook for the coming quarters.

Conclusion

The sharp decline in Avenue Supermarts’ share price reflects investor disappointment over slower revenue growth and a significant moderation in store expansion during the first quarter. While the company continues to deliver healthy double-digit sales growth, analysts believe stronger execution, improved margins and a faster pace of expansion will be necessary to justify its premium valuation. The upcoming quarterly earnings announcement is expected to play a crucial role in determining the stock’s near-term direction.