Avenue Supermarts shares dropped 7% after the company projected an annual store growth of 15%, missing market hopes for up to 100 new outlets. Investors are weighing this slower expansion plan against rising pressure from quick commerce platforms in metro markets.
Detailed Coverage
Shares of Avenue Supermarts, the operator of the popular DMart retail chain, faced a sharp decline on Tuesday, dropping nearly 7% to an intraday low of ₹3,755.10 on the National Stock Exchange. The sell-off followed management’s commentary regarding its growth plans for the 2027 fiscal year. The company indicated an annual store expansion rate of approximately 15%, which implies adding about 75 new locations. This projection trailed behind investor expectations, which had anticipated a more aggressive rollout of 80 to 100 new stores.
Impact of Quick Commerce on Growth
Beyond the pace of store openings, the company faces evolving challenges in the retail sector. Management acknowledged during recent interactions that quick commerce players are starting to affect sales in metro city stores. This competition has added to concerns about the company's long-term growth trajectory. Investors have been particularly focused on like-for-like sales growth, a metric measuring performance in existing stores, which has shown a moderating trend over the past three years. The absence of a clear strategy to reverse this cooling sales momentum appears to have dampened investor sentiment.
Financial Context and Recent Performance
In its first-quarter results for fiscal year 2027, Avenue Supermarts reported a consolidated net profit of ₹860.44 crore, marking an 11.33% increase compared to the same period last year. Revenue from operations grew by 14.9% to reach ₹18,794.53 crore. While these figures represent growth, the market reaction reflects a shift in focus toward the sustainability of this expansion and the potential for profit margin pressure if the company is forced to adjust its business model to counter quick commerce firms.
Market and Technical Indicators
The stock saw a notable surge in trading activity, with volume reaching approximately 2 million shares, significantly higher than the 0.4 million shares recorded in the previous session. From a price trend perspective, the stock is currently trading below its 20-day, 50-day, and 200-day moving averages, which often signals caution among short-term traders. As the company navigates this period of consolidation, the primary monitorables for shareholders will be the actual pace of new store commissioning in the coming quarters and whether management provides further clarity on how it intends to defend its market share against rapidly growing digital-first competitors.