Axis Securities has named Trent and Avenue Supermarts (D-Mart) as its top conviction ideas in the retail sector, highlighting their strong growth potential despite near-term demand pressures.
The brokerage said the overall retail sector witnessed a mixed performance in Q1FY26, with value retailers such as V-Mart and D-Mart outperforming, while mass and mid-market footwear segments stayed under pressure due to an early monsoon, geopolitical concerns, and rising competition from unorganised players. Premium and luxury categories, however, continued to show resilience.
Trent | Target Price: Rs 6,160
Axis Securities maintained a ‘Buy’ rating on Trent with a target price of Rs 6,160, citing a robust sales growth outlook driven by aggressive store expansion and ongoing assortment renewal. The brokerage said that reduced losses at Star Bazaar, higher traction at its Inditex JV, and improving earnings across formats strengthen its growth prospects.
Trent’s strategic initiatives-including a focus on private labels in Star Bazaar, expansion into the UAE, launch of Zudio Beauty, and entry into the LGD jewellery segment-will act as long-term growth levers, it added. “Given these factors, we remain positive on Trent from a mid- to long-term perspective,” Axis said.
Avenue Supermarts (D-Mart) | Target Price: Rs 4,810
On Avenue Supermarts, Axis retained a ‘Buy’ call with a target price of Rs 4,810. The brokerage highlighted that D-Mart has consistently delivered 17-20 per cent CAGR revenue growth, supported by steady store and retail space expansion of 14-15 per cent. In Q1FY26, the company reported nearly 18 per cent YoY revenue growth, led by higher footfalls.
While the retailer continues to face challenges from muted value-segment demand and longer gestation for large stores, Axis said that strategic steps such as leadership changes to revive GM&A, calibrated expansion of D-Mart Ready, and a prudent 15 per cent store addition plan are expected to drive recovery. Supported by stable macros and a strong festive outlook in H2FY26, profitability in high-margin categories should improve
Sector Outlook
Axis Securities said the retail sector remains a structural growth story, underpinned by rapid formalisation, rising disposable incomes, and faster expansion in smaller cities. The brokerage expects rural demand to improve on the back of government spending and urban remittances, while stable raw material prices and easing inflation could support margins in the medium term.