Dharmesh Kant, Head of Research at Chola Securities, believes DMart's expensive valuations could keep the stock under pressure for the next couple of years even as the retailer changes its expansion strategy. He is constructive on Poonawalla Fincorp, expects execution concerns in defence stocks to ease, and prefers LG Electronics among consumer names.
Kant said the market should focus on valuation rather than revenue growth in the case of Avenue Supermarts, the operator of DMart. He expects the company to continue facing a time correction as margins remain under pressure and debt has increased."The numbers were disappointing, particularly on the margin front," Kant said.
He added that despite changes in store expansion and the company's strategy to improve its online and offline integration, "our sense is valuation will play a larger role than the revenue growth multiple."According to Kant, the stock could decline 5-10% during the third quarter, that is, the October-December 2026 quarter, while the broader correction may continue until its e-commerce strategy begins contributing meaningfully to physical store growth.
On Poonawalla Fincorp, Kant said the lender delivered a strong quarterly performance across asset quality, net interest margins and profitability. He noted that return on assets crossed the 2% mark for the first time, reflecting improving operational performance.
While higher interest rates and RBI liquidity measures could weigh on margins for non-banking financial companies , he expects the stock to deliver a 10-12% trading rally. "The management has been able to meet their guidance," he said. Kant also remains positive on the defence sector, where he expects execution concerns to ease as aircraft engine supplies improve.
His preferred largecap pick is Hindustan Aeronautics Ltd. , followed by Bharat Electronics . He also likes Mazagon Dock Shipbuilders, saying the stock could gain momentum once the submarine-related agreements move forward. "Defence can be stock specific, but broadly we like these three companies," he said.
Asked about e-commerce, Kant said Chola Securities does not have formal coverage on Meesho but prefers logistics player Shadowfax because of its business model serving multiple e-commerce companies. In the consumer space, he expects festive demand to remain mixed after price increases in electronics and smartphones.
However, he maintains a neutral sector view while preferring LG Electronics India, where he sees the stock moving towards ₹1,900-1,950 over the next two to three months. For the full interview, watch the accompanying videoCatch all the latest updates from the stock market here