Avenue Supermarts shares have declined around 22% over the past six months as of Monday, October 5, with the stock failing to find much support even after the company's Q2 FY27 business update. The stock has now fallen around 6% so far this year, significantly underperforming the benchmark Sensex and Nifty which have gained 0.6% each. The decline was primarily driven by Citi maintaining its 'sell' rating with a target price of ₹3,300 and Goldman Sachs retaining its 'sell' rating with a target price of ₹3,800, citing concerns about the company's competitive landscape and expensive valuation. As per The Economic Times, Citi cited the company's expensive valuation at 61 times estimated FY28 earnings and risks to same-store growth and earnings from increasing competition in quick commerce.
Avenue Supermarts reported robust Q2 performance with standalone revenue jumping 18.41% to ₹19,206.18 crore, compared to ₹16,218.79 crore in the previous year. According to the company's exchange filing issued on October 3, the retailer has 518 stores as of September 30, 2026, representing continued expansion in the non-metro markets. This strong revenue growth accelerated from 15.1% in Q1 FY27 and 19% in Q4 FY26, with the Q2 revenue being 1.2% above CLSA's estimate and 1.1% ahead of consensus. The company's operational profitability showed improvement with EBITDA rising to ₹1,499 crore from ₹1,299 crore in the previous fiscal, while margins expanded slightly to 7.97% from 7.94%. As per CNBC TV18, the September quarter figures represent revenue generated from D-Mart's expanding physical retail network, even as the company continues to follow a measured approach to store additions.
On a quarter-on-quarter basis, D-Mart's revenue climbed 4.7% to ₹19,206.18 crore in Q2 FY27, demonstrating strong sequential momentum from the June quarter. As per the company's regulatory filing, the retailer's revenue was ₹18,343.49 crore in the June quarter, indicating consistent growth trajectory. This sequential improvement reflects the company's ability to maintain growth momentum while expanding its retail footprint across non-metro markets. The numbers are notable because they represent revenue generated from D-Mart's expanding physical retail network, even as the company continues to follow a measured approach to store additions. The September quarter figures are standalone revenue numbers and remain subject to limited review by the company's statutory auditors.
Store expansion remains an important part of Avenue Supermarts' growth strategy, with the company adding 18 stores in H1 FY27 compared with 17 stores in the year-ago period, indicating that the pace of expansion has remained broadly flat. The latest store count includes the Sanpada store in Navi Mumbai, Maharashtra, which remains closed to customers while reconstruction work is underway. This represents a 20% year-on-year increase in the store network and a notable sequential improvement from the 3 stores added in Q1 FY27. However, with store additions remaining broadly flat in H1FY27 and competition from quick-commerce players intensifying, the key question is whether the company's future growth can justify its premium valuation. As per Business Standard, while the addition of 15 stores in Q2FY27 optically suggests acceleration versus eight stores in the base quarter, the addition of 18 stores in H1FY27 was broadly comparable with 17 stores added in H1FY26.
NSE data show that DMart's adjusted P/E stands at 81.34 times, indicating that the stock continues to command a premium valuation. This means investors are already pricing in strong future earnings growth, but the divergent analyst views highlight the key question for investors: whether Avenue Supermarts' future growth can justify its premium valuation. CLSA retained its positive stance, citing the company's topline performance and potential growth drivers, while CITI has pointed out its cautious view on the company's valuation. With retail companies reporting high double-digit revenue growth in Q2 FY27 despite the festive season shifting to Q3, major retailers such as Avenue Supermarts, V-Mart Retail and V2 Retail posted significant revenue growth during the quarter. However, the company's same-store sales growth has been inconsistent and on a declining trend, with most brokerages expecting Q2 growth to be in the mid-to-high single digits after reporting 5.5% growth in the June quarter.
