DMART - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 How I’m Thinking About This

You’re asking for a deep dive into DMart (Avenue Supermarts Ltd), one of India’s most admired retail chains. I’m evaluating its fundamentals, valuation, and strategic outlook to determine its long-term investment potential and ideal entry point.

📊 Core Financials Breakdown

Profitability & Growth

PAT Qtr: ₹830 Cr vs ₹620 Cr → modest +2.13% QoQ growth

EPS: ₹45.2 — solid, but not explosive

ROCE: 18.4%, ROE: 14.0% — healthy, but not industry-leading

Debt & Cash Flow

Debt-to-equity: 0.03 — virtually debt-free

Dividend Yield: 0.00% — reinvests profits for growth

💰 Valuation Indicators

Metric Value Interpretation

P/E Ratio 106 Extremely overvalued vs industry PE of 76.6

P/B Ratio ~13.98 High premium to book value

PEG Ratio 4.86 Overvalued relative to earnings growth

Intrinsic Value ~₹4,200–₹4,400 Trading above fair value

Valuation is stretched, driven by investor confidence in its business model rather than near-term earnings.

🏬 Business Model & Competitive Edge

Industry: Organized retail — high growth, low margin

Moat: Hyper-efficient supply chain, low-cost operations, strong brand loyalty

Expansion: UBS projects 230–250 new stores in 3 years

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E-commerce: DMart Ready gaining traction, but still a small contributor

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DMart is a “major compounder” in India’s consumption story, especially among value-seeking middle-income consumers

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📉 Technical & Entry Zone

Current Price: ₹4,780

DMA 50/200: Trading above both — bullish trend

MACD: +75.1 — strong momentum

RSI: 61.6 — nearing overbought zone

📌 Suggested Entry Zone: ₹4,400–₹4,600

This range offers a better margin of safety and aligns with DMA support levels.

🕰️ Long-Term Holding Guidance

Hold if already invested — strong brand and growth runway

Buy on dips near ₹4,500 if bullish on retail consumption

2026 Target Price: ₹5,600 (UBS base case), ₹6,600 (bull case)

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⭐ Fundamental Rating

4.3

Exceptional business model and growth potential, but valuation is lofty. Best suited for long-term investors who believe in India’s retail boom. Let me know if you’d like a peer comparison with Trent or Reliance Retail.

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BW Businessworld

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Moneycontrol

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