Avenue Supermarts Q1 FY26: Profit Flat, Stock Falls

Share price reaction after results

Avenue Supermarts shares declined more than 2% in morning trade on Monday after the company announced its Q1 results on Friday after market hours. In another market update cited in the provided notes, the stock fell over 5% to an intraday low of ₹4,351 on the NSE. The negative reaction came even as parts of the coverage described earnings growth in the quarter ended March. Across the notes, the dominant theme was that the market is focusing less on headline growth and more on margins, competitive intensity, and the pace and cost of expansion.

What Q1 FY26 numbers showed

For Q1 FY26 (April to June), Avenue Supermarts reported revenue of ₹16,359.7 crore, up 16.3% year-on-year. Net profit for the quarter was ₹773 crore, marginally lower than ₹774 crore in the same period last year, indicating largely flat profitability despite strong revenue growth. Another data point in the provided material cited standalone revenue of ₹15,932.12 crore, also up 16.2% year-on-year. The combination of rising sales and flat profit has kept attention on cost pressures and margin trajectory.

Margin and cost pressures stayed in focus

The notes repeatedly flagged narrowing profitability as a key issue. One summary stated that Q1 FY26 profit was flat despite strong revenue growth due to competition and investment-led cost pressures denting margins. HSBC said Q1 FY26 Ebitda and margin slightly missed even a muted consensus, and highlighted that Ebitda margins have declined year-on-year for five consecutive quarters. Another line item in the supplied “Threats” section also flagged degrowth in revenue, profits, and operating profit margin on a quarter-on-quarter basis in recent results, without providing specific quarter-on-quarter figures.

Store expansion plans and cash concerns

Brokerage commentary in the provided text linked accelerated store openings to higher cost intensity and potential cash impacts. One note said the company’s store expansion plans may dent its cash holding further, adding to concerns around weak growth in bill cuts per store. Goldman Sachs also referenced store-add expectations, with a forecast of 75 store additions in FY26 versus 50 in FY25, and said the market anticipates 85 to 90, raising the risk of missing store-add targets. Separately, HSBC referred to a plan to add 54 stores in FY26, but said the aggressive plan does not change its negative stance.

Competition from quick commerce in urban markets

Competitive intensity from quick commerce players appeared across multiple notes. Emkay Global said Avenue Supermarts’ unique selling proposition is fading compared with quick-commerce businesses. Goldman Sachs also pointed to rising competitive pressure from large quick commerce players in urban markets. One Goldman note added a comparison, stating Blinkit’s NOV is expected to exceed Avenue’s net sales in FY27, underscoring how investor attention is shifting toward alternate retail formats.

Brokerages: ratings and targets cluster below the market

Brokerage responses cited in the supplied text remained cautious, with several ‘sell’, ‘reduce’ or ‘underweight’ calls. Goldman Sachs maintained a ‘Sell’ rating in multiple notes, with targets referenced at ₹3,500 per share and ₹3,425, and later a cut to ₹3,370 from ₹3,450 after a separate business update. Emkay Global maintained a ‘sell’ recommendation with an unchanged target price of ₹3,700, while JPMorgan maintained a ‘hold’ rating with a target of ₹4,150. HSBC retained ‘reduce’ and revised its target down to ₹3,600. Morgan Stanley maintained ‘underweight’ with a target of ₹3,350 in one note, and a separate clip cited an underweight target of ₹3,260. Macquarie was cited with an ‘underperform’ rating and a target of ₹3,000.

Technical and third-party score signals were negative

Apart from broker notes, the provided material included a summary view indicating a ‘Sell’ rating based on quality, valuation, financial trend, and technical indicators. It also said the technical grade for Avenue Supermarts was assessed as “mildly bearish”. Another metric cited was a MarketsMOJO Mojo Score of 44.0, corresponding to a ‘Sell’ grade. The same section said the stock’s one-year return was -3.84 as of 28 March 2026, and that it underperformed the BSE500 index over the past three years.

What analysts highlighted about growth and estimates

Some broker notes questioned whether growth is enough to offset costs and valuation. Emkay said that with accelerated store openings it sees topline growth of around 19% in FY27, but higher allied costs could restrict net profit growth to around 16%. Goldman Sachs said an earnings downgrade cycle continues while valuations remain elevated, and cited the stock trading at around 75x FY27E despite a recent correction. Another Goldman note said FY26 consensus EPS was already down 9.6% year-to-date and highlighted the level of profit growth required in 2HFY26 to meet consensus, implying the risk of further downgrades.

Key facts at a glance

Why the story matters for investors

The data points in the provided material show the core issue investors are weighing: strong revenue growth alongside profit stagnation and margin pressure. The broker commentary also shows a valuation debate, with Goldman referencing elevated multiples and continued estimate risk. Store expansion is simultaneously a growth lever and a margin headwind, according to multiple notes, especially when combined with capability investments and higher allied costs. With several target prices clustered below prevailing levels cited in the same text and multiple negative ratings, near-term sentiment is being driven more by execution and profitability than by topline expansion.

Conclusion

Avenue Supermarts’ Q1 FY26 results showed revenue growth to ₹16,359.7 crore, but net profit stayed largely flat at ₹773 crore, keeping the focus on margins and competition. Multiple brokerages reiterated cautious stances, including several ‘sell’, ‘reduce’ and ‘underweight’ calls with targets largely in the ₹3,000 to ₹3,700 band. Investors are also watching store-add execution and the impact of quick commerce competition as the company continues to expand.