DMart At Crossroads: SEBI RAs Weigh In On Q1 Show, Flag Margin Pressure And Technical Inflection

Avenue Supermarts (DMart) shares fell over 1% on Monday after its first-quarter (Q1 FY26) earnings failed to impress the street. Profits rose 18% but margin miss kept the bulls on edge.

Q1 net profit rose to ₹773 crore, while revenue rose 18% to ₹14,745 crore, driven by steady store additions and recovery in the food & FMCG segment. EBITDA margins declined to 8.6% from 8.8% year-on-year (YoY), due to higher operating costs and employee expenses.

SEBI-registered analyst Varunkumar Patel highlighted that while earnings show healthy growth, margins remain under watch as the cost pressures could cap its near-term upside. But the long-term retail story stays solid as strong cash and store network are key strengths.

On the technical front, he observed that its Relative Strength Index (RSI) is below 50 on the daily chart, which indicates bearishness. The stock is trading around its crucial support zone of ₹3,975-₹3,985. If it breaks this, the next support is seen near ₹3,500. Patel remains neutral to slightly bearish till margins improve.

Meanwhile, analyst Rajneesh Sharma noted that while DMart delivered double-digit revenue growth driven by higher volumes rather than price hikes, with staples leading the growth, but general merchandise sales remained subdued. The management continued to expand its store footprint, and its goals of margin normalization are on track, but margin pressures continue to remain. 

Technically, Sharma noted that the stock is forming a tightening base pattern and that with the right catalyst, it could see a new trend. On the weekly chart, the orange ascending trendline from 2020 has held firm, with the ₹3,350–₹3,550 zone forming a durable base. It is now pressing against a confluence zone: ₹4,175–₹4,200, with resistance seen at ₹4,610.

He said that if the stock breaks ₹4,610 with volume, then ₹5,000 and higher levels are likely to be tested, but failure to hold ₹4,100 could lead to a fall to ₹3,550. 

Sharma concluded that for the stock, the next move won’t be about this quarter. It’ll be about the next breakout. As long as ₹4,100–₹4,200 holds, bulls stay in control. A close above ₹4,610 could unleash the energy built up since 2022.

And Vijay Kumar Gupta highlighted that DMart has slipped below its Ichimoku baseline and Tenkan-Sen, triggering a short-term bearish shift. Commodity-driven cost pressure and muted volumes on the bounce suggest that traders need to watch key levels closely before repositioning. Its on-balance volume is flat to slightly declining, which shows no strong buyer return. And the Commodity Channel Index (CCI) is oversold (around –130), hinting at a possible short-term bounce. 

Gupta identified immediate resistance at ₹4,170–₹4,212 (key Ichimoku levels); and a clean recovery above these with volume would stabilize the structure. Immediate support is seen at ₹4,000–₹3,980 (the base of recent consolidation), and a strong hold here may offer a low-risk bounce opportunity. 

If it falls further, then deeper support is seen at ₹3,820–₹3,800, which was its previous swing lows and long-term demand. A breach below this would put pressure toward ₹3,600. A failure to hold above ₹4,000 could trigger further downside, while a breakout and sustained trade above ₹4,170 may open up upside targets toward ₹4,350. 

For now, DMart remains at a tactical inflection point, with confirmation above resistance levels required before a bullish stance is justified. He suggested watching ₹4,170–₹4,212 for reversal structure, with stop-loss below ₹4,000.

Data on Stocktwits shows that retail sentiment has been 'bearish' on this counter amid 'heavy' message volumes.

DMart shares have risen 13% year-to-date (YTD). 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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