DMart, Trent outlook: Elara lifts FY27 growth to 20%

Why the March-quarter store cycle matters

A sharp acceleration in store additions across key retail formats in the March quarter has eased near-term concerns on growth for Tata Group’s Trent and improved the earnings outlook for Avenue Supermarts (DMart), according to Elara Capital. Karan Taurani, executive vice president at Elara Capital, said store addition momentum has been “meaningfully stronger than expected,” especially for Trent. The shift is important because like-for-like (LFL) growth has been softer for parts of organised retail, and incremental stores have become a bigger driver of topline. Elara’s note frames the current cycle as one that reduces downside risks to growth and improves earnings visibility across organised retail.

Trent: operational momentum after a sharp stock correction

Trent’s stock has corrected about 22% over the past three months, the report noted, and the improved operating momentum could support a partial recovery in sentiment. A key monitoring point is LFL growth at Zudio, where Taurani expects benefit if like-for-like growth “comes back.” Elara also highlighted that the expansion has been driven in part by a push into North India, where Trent is scaling up its presence. Going ahead, analysts are likely to track the pace of new store ramp-ups and the sustainability of the expansion cycle.

DMart: upgrade cycle thesis, but valuation risk remains

Elara’s view on DMart is that store additions remain the key growth driver, even as digital channels reshape grocery shopping behaviour. Taurani said “strong store additions coupled with stabilising LFL trends support the case for an upgrade cycle for DMart.” He added that revenue growth could move towards 18% to 20% in FY27, compared with earlier expectations of 16% to 17%. At the same time, Taurani flagged that DMart is “highly underpenetrated,” but valuations remain a risk, indicating that the operating outlook and the stock’s valuation need to be weighed separately.

Quick commerce: easing intensity, but long-term constraints

Elara called out a change in competitive intensity that could help DMart’s margins. Taurani said the “increasing focus on profitability by quick commerce players is incrementally positive for DMart margins.” However, the note also acknowledged that LFL growth has slowed to around 5% due to the rapid expansion of quick commerce and online grocery platforms. Taurani added that margin risks for DMart are largely behind, but structural challenges from digital channels could cap long-term growth below 20%.

What Elara said it will track for organised retail

For Trent, the report pointed to LFL trends, particularly at Zudio, as a key variable alongside new store ramp-ups. For DMart, the interplay between store addition-led growth and competitive behaviour from quick commerce remains central. Elara’s broader conclusion was that the stronger-than-expected store addition cycle improves earnings visibility across India’s organised retail sector. The emphasis, however, remains on execution, including how quickly new stores mature and whether LFL trends stabilise further.

India-UK FTA: a tailwind for alcoholic beverages, especially bulk Scotch

In the CNBC-TV18 conversation, Taurani said the India-UK FTA can be a “big tailwind” for the alcoholic market, citing both volume and margin benefits. He said volume growth that is at 4% to 5% on a steady-state basis could potentially move to 7% to 8% because of the FTA, alongside a margin benefit. In another segment, Taurani also said United Spirits has been viewed as a major beneficiary, and its stock has moved up by about 14% to 15% over the last two months on anticipation of the deal. He added that volume growth could accelerate from a 5% to 6% CAGR towards an 8% to 9% kind of CAGR because of the India-UK FTA.

India-EU FTA: product-led competition risk in premium spirits

Elara contrasted the India-UK FTA with the proposed India-EU pact, saying the India-EU agreement is expected to be product-led and could narrow the price gap between imported European brands and domestic premium offerings. Taurani said this is “not just a margin story” and that the pact could increase product-level competition, especially in premium spirits. The report noted that import duties on beer have been slashed to 50% from 110% under the proposed agreement, but Elara expects limited competitive impact in beer due to India’s ABV-linked taxation and the localisation of manufacturing by global majors.

Company-specific markers: United Spirits, Radico, Tilaknagar, UBL

On profitability, Taurani said United Spirits’ execution has been strong, with core alcohol EBITDA margin moving from 15% to 17% despite inflationary headwinds. For the India-UK FTA’s margin impact, Elara said lower bulk Scotch duties are expected to aid gross margins by about 60 basis points for Radico Khaitan and United Spirits, and roughly 50 basis points for Tilaknagar Industries. Elara also highlighted Radico Khaitan’s premium portfolio and noted that vodka accounts for nearly 60% of Radico’s volumes, while its luxury and semi-luxury segments are growing at 30% to 40% year-on-year with a sales salience of about 8% to 9%. Separately, Allied Blenders and Distillers has stated a margin target of 18% by FY28, with an expectation of cost savings from the India-UK trade deal.

Key numbers and indicators from the Elara commentary

What investors are likely to watch next

For organised retail, the immediate watchpoints remain LFL trajectory, store ramp-up speed, and the durability of the current store addition cycle. For alcobev, the market focus is likely to stay on how lower bulk Scotch costs and pricing changes influence premium portfolio volumes and mix, especially at companies with premium-heavy strategies. Elara has also cautioned that an India-EU FTA could heighten competitive pressure for domestic players in premium segments, even as the India-UK FTA offers margin tailwinds.

Conclusion

Elara’s central message across consumption is that operating momentum is improving in organised retail through stronger store additions, while trade agreements are reshaping the economics and competitive intensity in alcoholic beverages. For DMart, Elara’s FY27 growth view has moved up to 18% to 20%, even as valuations and digital competition remain key constraints. For Trent, the focus is on Zudio’s LFL recovery and execution in newer regions such as North India. In alcobev, the India-UK FTA is positioned as a volume and margin tailwind, while the proposed India-EU pact is framed as a more direct product-competition event that could challenge premium domestic portfolios.