DMart target raised to ₹5,000: What to do in 2026

What changed for Avenue Supermarts (DMart)

Motilal Oswal has reiterated a Buy on Avenue Supermarts (DMart) while raising its target price to ₹5,000 from ₹4,600. The brokerage said the upgrade follows signs of margin recovery after several pressured quarters and stronger confidence in DMart’s store expansion pipeline. The revised target implies a potential upside of up to 15%, as cited in the note. The stock’s premium valuation and rising competition from quick-commerce platforms remain central to the debate on whether the upgrade can translate into sustained market outperformance.

Motilal Oswal’s key thesis: margins may have bottomed

Motilal Oswal expects incremental support from margins after a difficult period for profitability. It said DMart’s gross margins have likely bottomed out in Q1 FY26, even as the competitive environment stays intense. The brokerage specifically flagged pricing pressure from quick commerce (QC) as a near-term monitorable, because it can affect the sustainability of recent improvements. At the same time, Motilal Oswal argued DMart’s value-led positioning and store economics keep it relevant against convenience-focused online models.

Revenue growth improved in Q4 FY26

The brokerage note pointed to an improvement in growth trajectory. DMart’s revenue growth increased to 19% YoY in Q4 FY26, compared with 15% YoY in 9M FY26. For investors, that comparison matters because it signals better momentum into the year-end quarter. However, the article also highlights that competitive pressure is now being felt across both offline and online retail channels, creating a narrow path between defending market share and protecting margins.

Store additions move to the centre of the upgrade

Motilal Oswal identified store expansion as the key growth trigger. It raised its FY27-28 store addition estimate to 85-90 stores from an earlier 70-80 range. The brokerage said the decision reflects “significant white spaces” in densely populated states such as Uttar Pradesh, Bihar, and West Bengal. The emphasis on these markets also ties into the view that tier-2-plus cities can drive long-term volume growth for value retail, provided execution stays consistent across newer catchments.

What Motilal changed in its estimates and valuation

Alongside the target hike, Motilal Oswal increased its forward earnings assumptions. It said it raised FY27/28E EBITDA by 5-7% and PAT by ~2-4%, driven by higher store additions. The revised target of ₹5,000 is based on a valuation of 45x FY28 EV/EBITDA, which the note said implies around 80x FY28 P/E.

Motilal Oswal also built in a 19%/20%/16% CAGR for consolidated revenue/EBITDA/PAT over FY26-28. This is supported by an estimated ~16% CAGR in retail store/area and a mid-to-high-single-digit like-for-like growth assumption.

Why valuation remains the biggest sticking point

The article flags valuation as a core concern even for investors who agree with the long-term store-led story. DMart is cited as trading at around 99x P/E, far higher than competing large-format or diversified peers mentioned in the text such as Reliance, cited at roughly 21-25x P/E. The premium signals the market has already priced in a meaningful portion of future growth, which increases downside sensitivity if earnings miss estimates.

DMart’s market capitalisation is cited at around ₹286,000 crore (₹2.86 lakh crore). That scale underscores how expectations are already elevated, and why brokerage upgrades tend to focus on execution markers like store addition velocity, margin stability, and like-for-like growth.

What Q3 numbers and operating indicators showed

A separate update in the provided text highlighted strong quarterly performance with a margin-led beat, but also pointed to softer same-store growth.

Operationally, like-for-like sales growth slowed to 5.60% versus 8.30% in the year-ago period, described as the weakest in five quarters. The same update also mentioned analysts attributing part of the margin spike to one-off factors, and raised questions on how repeatable those gains are if pricing competition intensifies.

Where other brokerages stand on DMart

The article set out a mixed Street view, with a wide spread in targets and ratings. Morgan Stanley is cited with an Overweight rating and a ₹5,188 target price. Another summary in the text said that several analysts maintain Hold calls, with an average 12-month target around ₹4,141. The text also mentions CLSA as among the most optimistic, with a target of ₹5,466 and an “accumulate” rating.

Market impact and what investors typically track next

The immediate market reaction referenced in the text is broadly positive after upgrades, but the follow-through typically depends on whether DMart can show durable improvement in margins while maintaining growth. The article repeatedly highlights quick commerce as the key competitive variable because it pressures pricing and shifts consumer expectations on convenience. Another monitorable is like-for-like growth, which can indicate whether incremental stores are adding growth beyond a base that may be maturing in some clusters.

Separately, the text also references a later expansion update where DMart added 58 new stores in Q4 and accelerated expansion to 85 new stores in FY26, while nearing the 500-store milestone. Such expansion milestones can influence sentiment, but the sustainability of returns depends on execution quality and cost control across regions.

Conclusion

Motilal Oswal’s upgrade to ₹5,000 centres on faster store additions and the view that gross margins bottomed in Q1 FY26, while acknowledging near-term pricing pressure from quick commerce. The next set of quarterly updates on margins, like-for-like growth, and the pace of store openings will likely be the key checkpoints for investors tracking whether the valuation premium remains justified.