DMart Q4 FY26: Profit Miss; Margins Up, Stock -3% May 4

Stock reaction: early drop despite stronger operating metrics

Avenue Supermarts Ltd, which runs the DMart retail chain, saw its shares fall more than 3% in Monday’s trade after reporting mixed Q4 FY26 results. The stock was trading at ₹4,434.3 in morning trade on May 4, down 3.3% on the day. The reaction came even as revenue growth stayed strong and margins improved. Investors appeared to focus on the earnings miss versus estimates and the broader debate around valuation.

Despite the one-day decline, the longer-term price trend has been positive. DMart is up 10.4% over the past one year, outperforming the Nifty 50, which is down around 1% over the same period. Intraday price action across reports also showed volatility, with the stock at one point reported to have jumped close to 4% before paring gains.

Q4 FY26 headline numbers: profit misses estimates

DMart reported net profit of ₹656.6 crore for Q4 FY26, up 19.2% year-on-year from ₹550.9 crore. However, the profit figure was below the CNBC-TV18 poll estimate of ₹680 crore, which contributed to the “mixed” assessment from the market.

Revenue for the quarter rose 18.9% to ₹17,683.9 crore, compared with ₹14,871.9 crore a year earlier. Separately, an exchange filing referenced standalone revenue from operations of ₹17,204.50 crore for the January to March quarter, described as provisional, with final numbers to follow after audit. The presence of multiple reported figures in market coverage added to the noise, even as the direction of growth remained clear.

EBITDA and margins: improvement becomes the key positive

Operating performance was relatively stronger. Q4 FY26 EBITDA increased 26.7% year-on-year to ₹1,210.5 crore, slightly ahead of the estimate of ₹1,200 crore. Operating margins expanded to 6.85% from 6.42% in the year-ago period.

Morgan Stanley also highlighted margin improvement on its framework, citing a 40 basis points year-on-year increase in gross margins to 14.6% and a 42 basis points rise in EBITDA margins to 6.8%. Another report framed the margin rise as a reversal of earlier weakness, noting that margins had been under pressure for multiple quarters before this uptick.

Like-for-like growth and demand signals

Operational commentary from brokerages pointed to better same-store momentum. Morgan Stanley flagged like-for-like (LFL) growth of 10.8%, described as the highest in more than two years. JM Financial read the Q4 update as a sharp acceleration in same-store sales growth to around 10%, compared with 6% to 7% in the preceding two quarters.

JM Financial also noted that the company’s Q4 growth came after 13% revenue growth in Q3 FY26, describing the quarterly volatility as unusual for the business. The firm said it would watch for management commentary on what drove the Q4 acceleration, along with updates on margins, cash flows, and the mix across categories.

Store expansion: 58 additions in Q4, over 500 stores

Store additions were a major part of the Q4 narrative. DMart opened 58 stores in the quarter, and the chain crossed 500 stores nationwide. FY26 saw a record 85 store additions, stated to be the highest ever for the company.

The fast pace of store openings is being positioned as a growth driver, especially in smaller towns. At the same time, broker notes highlighted that accelerated expansion can raise interest, depreciation, and rentals, particularly where new stores are leased, and may pressure cash flow if operating cash generation is not sufficient.

Full-year FY26 snapshot: revenue and profit growth

For the full FY26 year, the company reported revenue of ₹66,968 crore, up 15.9%, and net profit of ₹3,224 crore, up 10.1%. The company’s value retail approach and store operations in smaller towns were cited as supporting operating performance and expansion plans.

What brokerages said: targets split across a wide range

Brokerages largely acknowledged the strength in operating metrics, but views diverged on valuation and competition.

• CLSA maintained a high conviction outperform rating with a target price of ₹6,628, noting EBITDA growth around 25% and PAT growth of 17% as broadly in line, with EBITDA margins ahead of estimates.
• Morgan Stanley retained an overweight rating with a target of ₹5,188, highlighting margin gains and strong LFL growth, and added that the business had not seen supply chain disruptions so far.
• Jefferies maintained a hold rating and raised its target price to ₹4,500, pointing to a slight EBITDA beat, double-digit LFL growth, and record store additions, while describing the surge as temporary.
• Emkay Global Financial Services kept a Sell rating with a target of ₹3,700, citing high valuation and competitive risks.
• Motilal Oswal reiterated Buy with a higher target of ₹5,200 in one report, while another note referenced a target raised to ₹5,000.
• Nuvama Institutional Equities maintained Hold and raised its target to ₹4,975.

The average 12-month analyst price target cited from 30 analysts was ₹4,396.77, implying a potential downside of about 4.12% from the referenced trading level.

Valuation and competition: the core debate

A key issue in the market reaction is valuation. DMart’s trailing twelve months (TTM) P/E was cited around 101x, substantially higher than the comparison figures mentioned for peers, including Reliance Retail at about 22-23x and Tata Consumer Products at roughly 70-77x.

Competition from quick commerce was repeatedly flagged as a risk to DMart’s value-led model in urban markets, where convenience-led shopping has grown. Broker notes also pointed to potential pressure on margins and market share if competitive intensity remains high.

Key financial and operating metrics (Q4 FY26)

Brokerage targets at a glance

Why this quarter matters for investors

The Q4 print sharpened the trade-off investors are tracking. On one side, DMart delivered strong revenue growth, faster store additions, and an improvement in operating metrics, including margins and like-for-like growth. On the other, profit fell short of estimates and the stock’s valuation remains a major sticking point for several analysts.

The next set of confirmations investors will watch, based on the broker notes, includes whether the pick-up in same-store growth sustains, how expansion costs flow through interest and depreciation, and how margins behave amid quick commerce competition.

Conclusion

DMart’s Q4 FY26 results combined strong growth and improved margins with an earnings miss versus expectations, leading to a negative initial stock reaction on May 4. Brokerages stayed split, with targets ranging from ₹3,700 to ₹6,628, reflecting the tension between operating momentum and valuation concerns. With FY26 store additions at a record level and multiple houses tracking same-store trends closely, the next audited results and management commentary will be key to how the market prices the growth plan.