ICICI Securities gave a hold rating to Avenue Supermarts with a target price of Rs 3,700. The company saw its Q2FY27 revenue grow 18.4% year-on-year. However, rising costs and competition from quick-commerce platforms impacted margins. Experts said, "risk-reward remains balanced," as the firm manages debt while focusing on store expansion.

ICICI Securities research report on Avenue Supermarts Avenue Supermarts (DMART)'s Q2FY27 standalone revenue grew 18.4% YoY, driven by improved LFL (like-for-like) growth of 9.5% (vs. 6.8% in Q2FY26), reflecting better store productivity. However, EBITDA margin contracted 28bps YoY to 7.3% (broadly in line with our expectation) as GM pressure, entry-level wage inflation and faster growth in operating expense offset revenue improvement. Debt rose to ~INR 41bn and inventory days to 36, supporting expansion but weighing on efficiency and returns. DMART's EDLC-EDLP model remains a key strength, supporting value-led footfalls and its position in staples. However, wider reach and convenience of quick-commerce (QC) platforms could pressure footfalls and planned purchases. We believe, with cost pressures, softer efficiency metrics and current valuations limiting near-term upside, risk-reward remains balanced. Maintain HOLD. Outlook We broadly maintain estimates for FY27/28, modelling revenue/EBITDA/PAT CAGRs of 17%/18%/19% over FY26-28. Maintain HOLD rating with a DCF-based revised target price of INR 3,700 (INR 4,200 earlier). At our target price, DMART would trade at an implied P/E multiple of ~48x based on Sep'28E EPS. For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Avenue Supermarts - 1210026 - icici