DMART - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📊 Investment Rating: 3.8

DMart (Avenue Supermarts Ltd) is a retail powerhouse with a strong brand and lean cost model, but its current valuation and growth metrics suggest caution for long-term investors. Let’s unpack the details

🧠 Fundamental Analysis

Valuation

Stock P/E (96.1) vs Industry P/E (63.7) → Highly overvalued

PEG Ratio (4.41) → Indicates poor growth-adjusted valuation

Price to Book (≈12.2) → Expensive relative to book value

Profitability

ROE (13.4%) and ROCE (18.0%) → Solid, but not exceptional for a retail compounder

EPS (₹41.6) → Decent earnings base

Dividend Yield (0.00%) → No income return; focused on reinvestment

Financial Health

Debt to Equity (0.04) → Excellent balance sheet

Institutional Holding: Slight uptick in FII/DII interest

📈 Technical & Trend Indicators

Current Price (₹3,999) is below both DMA 50 (₹4,113) and DMA 200 (₹4,085) → Bearish trend

RSI (39.7) → Near oversold zone, potential for bounce

MACD (-56.4) → Bearish momentum

Volume is below average → Weak conviction

🏁 Ideal Entry Price Zone

Based on valuation and technicals

₹3,600–₹3,800 is a more attractive entry zone

This aligns with support near 52-week low and RSI oversold levels

🧳 Exit Strategy / Holding Period

If you already hold the stock

Holding Period: Minimum 3–5 years to capture retail expansion and margin recovery

Exit Strategy

Partial exit if price crosses ₹4,800–₹5,000 and PEG remains elevated

Hold if ROE/ROCE improve and PEG drops below 2.0

Reassess if price breaks below ₹3,400 or if margins continue to compress

🔮 Long-Term Outlook

DMart added 50 stores in FY25, exceeding expectations

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Revenue grew 16% YoY in Q1 FY26, but EBITDA margins declined to 7.94%

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Analysts are split

Motilal Oswal: Buy, target ₹4,950

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Centrum Broking: Reduce, target ₹4,035

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Axis Securities: Buy, target ₹4,810

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🧪 Final Verdict

DMart is a high-quality retail brand with strong execution, but its valuation is stretched and growth metrics are softening. It’s a decent long-term candidate if accumulated near support zones and held with patience.

Want to explore how it stacks up against peers like Trent or Reliance Retail?

1

Business Today | MSN

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Goodreturns

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