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Recommendation Rationale

* Consistent Revenue Growth: D-Mart has consistently delivered 17-20% CAGR revenue growth over the past several quarters, driven by 14-15% expansion in its network and retail space. The recent investment in D-Mart Ready, to support operations, working capital, and expansion, is a step in the right direction. This strategic move will strengthen the company’s position in the competitive online grocery market and is expected to yield long-term benefits. In Q2FY26, D-Mart reported ~15.5% YoY revenue growth, driven by increased footfalls.

* Challenges and Strategic Interventions: Despite headwinds from a muted demand environment in recent years, DMart’s strategic focus on enhancing store productivity, improving profitability, and reviving the General Merchandise & Apparel (GM&A) segment indicates a clear course correction. Meanwhile, the management noted that following the recent GST reforms, the company has passed on the benefits of rate reductions to customers wherever applicable. With consumer demand improving, macroeconomic conditions stabilising, recent announcements on GST 2.0 reforms, and a robust festive season anticipated in H2FY26, these initiatives are well-aligned to support recovery and drive growth in high-margin GM&A categories. Key risks include a prolonged recovery in consumer demand and heightened competitive intensity.

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