Shares of Avenue Supermarts gained 4 per cent today after the operator of supermarkets chain D-Mart announced a 36 per cent rise in standalone revenue for the quarter ended September 2022. Avenue Supermarts stock rose 3.98 per cent to an intraday high of Rs 4601.9 against the previous close of Rs 4425.65 on BSE. Avenue Supermarts shares have been gaining for the last three sessions.
The large cap stock is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. In a year, the stock has risen 5.65 per cent and lost 3.74 per cent in 2022. However, in a week, the stock has climbed 5 per cent on the start of the festive season.
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Revenue in Q2 rose to Rs 10,384.66 crore against Rs 7,649.64 crore in the corresponding period last year. Revenue has almost doubled compared to the pre-pandemic period of Q2 FY20, when it stood at Rs 5,949.01 crore. The total number of stores as of September 2022 stood at 302.
The financial earnings for the July-September quarter are yet to be released. The stock is likely to shine amid the ongoing festive season.
Domestic brokerage firm Prabhudas Lilladher has a ‘buy’ rating on the stock with a target price of Rs 5,118. “With the festive demand hitting, D-Mart will witness strong growth in the zero Covid restrictions environment. It has a huge growth runway, given a low probability of heightened competition in modern trade and 1,500+ store potential in existing clusters. We estimate 42 percent PAT CAGR over FY22-25” said the brokerage in a recent note. The company’s strategy of “Everyday Low Prices” (EDLP) will push sales during the current high inflation scenario and attract the middle-class to organised retail from unorganised retail, it added.
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Meanwhile, analysts at Motilal Oswal Financial Services are “neutral” on the stock. They have assigned a target price of Rs 4,100. Standalone revenue growth at 36 per cent YoY was 6.4 per cent below the estimate. “However, it continued its healthy store additions. It has added 18 out of a total of 40 stores factored in FY23. In the last three years, it saw a strong 60 percent/93 percent cumulative store/footprint additions, despite the COVID-led lockdown,” the financial services firm said.
In the first quarter of the current fiscal, the firm reported a 490.30 per cent year-on-year rise in standalone net profit at Rs 680 crore compared with Rs 115 crore in the corresponding quarter last year. DMart said its standalone revenues jumped nearly two-fold to Rs 9,806.89 crore in the June quarter from Rs 5,031.75 crore in the year-ago quarter. EBITDA margins in Q4 came at 10.3 per cent compared with 4.4 per cent in the year-ago quarter. The standalone PAT margin stood at 6.9 per cent in Q1FY23 as compared with 2.3 per cent in Q1FY22.
