Shares of Avenue Supermarts Ltd., the parent company of the hypermarket chain DMart, hit an upper circuit of 15% on Friday, January 3, following the company’s report of strong sales numbers for the third quarter. The growth of 17.5% marks the highest in several quarters.

Global brokerage firm CLSA has an ‘Outperform’ rating on Avenue Supermarts, with a price target of ₹5,360 per share. This target implies a potential upside of 48% from Thursday’s closing levels.

Avenue Supermarts reported standalone revenue of ₹15,565 crore, which was 2% above estimates. Sales growth for quarter stood at 17.5% year-on-year as against 14.2%. Sequentially, sales grew 11%.

The company has added 10 new stores during quarter as against six in the previous quarter, taking the total count to 387 stores at end of the third quarter of the current fiscal year.

Morgan Stanley has an ‘Underweight’ recommendation on Avenue Supermarts, with a price target of ₹3,702 per share. The foreign brokerage said that weak growth trends continue.

The foreign brokerage noted that standalone third-quarter revenue of ₹15,570 crore was up 17.5% year-on-year, 1% above expectations. Topline growth was led by an average 12% increase in store count and same-store sales growth.

The growth trend improved sequentially; however, the company remains well below the historical 20% topline growth algorithm for the business.

On the flip side, Goldman Sachs has a ‘Sell’ rating on Avenue Supermarts. The brokerage has a price target of ₹3,425 per share, which suggests a potential downside of 5% from the last closing levels.

Goldman Sachs said that the third quarter growth saw an improvement. Margins will be a key watch-out given increased discounting.

The brokerage believes that rapid scale-up of quick-commerce players will continue, and are expected to adversely impact Avenue’s growth going ahead.

Citi also has a ‘Sell’ rating on Avenue Supermarts, with a target price of ₹3,500 per share.

In its note, Citi highlighted that the Q3 update showed 17.5% year-on-year revenue growth. Revenue per store saw a 2.7% five-year CAGR (4.4% YoY growth; 1-7% YoY growth in the last four quarters), while revenue per square foot (throughput) recorded a -1.5% five-year CAGR (3.4% YoY growth, assuming the average store size of new stores aligns with the trailing twelve months).

Citi believes throughput continues to be impacted by an adverse product mix, store additions in smaller towns, and increasing competitive intensity from quick commerce.

Store additions during the quarter were 10 (22 in 9MFY25 compared to 41/40 in FY24/FY23).

The brokerage remains cautious due to risks to same-store sales growth (SSG) from rising competitive intensity in quick commerce, store additions (and the resultant revenue growth), and earnings (due to lower throughput and adverse product mix impacting gross margins) as well as price-to-earnings (P/E) multiples.

Out of the 29 analysts that have coverage on Avenue Supermarts, 11 of them have a ‘Sell’ rating on the stock, nine of them say ‘Buy’, while the other nine have a ‘Hold’ rating.

Shares of Avenue Supermarts are currently locked 15% higher on Friday at ₹4,152.75.