Retail Chains Show Signs of Growth Slowdown Amid High Valuations

Leading Indian retail chains like Trent (Westside, Zudio, Star Bazaar) and Avenue Supermarts (DMart) are showing early signs of a growth slowdown in Q1 FY26, raising concerns among investors about sustainability amid elevated valuations. Trent’s revenue grew 19% YoY to ₹4,883 crore, while net profit rose 8.4%, reflecting margin pressures. DMart’s revenue growth eased to 16.3% with like-for-like (LFL) growth slipping to 7.1% (from 9.1% a year ago), indicating softer consumer demand. Both companies expanded aggressively—Trent to 1,043 stores and DMart to 424—but growth per existing store is moderating. This comes as consumers turn cautious due to global trade tensions, job cuts, and macroeconomic uncertainty. Investor sentiment has cooled, with Trent’s stock hitting a 52-week low in April and trading at a steep P/E of ~108x FY26 earnings, while DMart trades at ~72x, well above historical averages. Despite strong past performance—Trent’s FY25 revenue grew 38.5%, DMart’s 16.9%—the sustainability of such high multiples is under scrutiny as sales momentum cools. The key question for Dalal Street: Can these retail giants justify premium valuations if growth continues to decelerate? With consumer spending patterns under pressure, investors will closely watch upcoming quarters to see if expansion-driven growth can offset weakening discretionary demand.