Shares of Radhakishan Damani-led Avenue Supermarts (DMart) fell nearly 4 per cent in Monday’s trade, as the retailer’s September quarter results disappointed investors on several counts. Inflationary stress remains acute in the lower price points in discretionary non-FMCG categories, analysts said adding that footfalls continued to remain below the pre-Covid level, even as the average basket size improved. Overall, analyst views differ widely on the stock, with price targets for DMart ranging roughly between Rs 3,000 and Rs 5,000.┬а
On Monday, the scrip fell 3.66 per cent to hit a low of Rs 4,145.70 on BSE.┬а
The retail chain owner reported a 64.13 per cent rise in its consolidated net profit at Rs 685.71 crore in September quarter. DMart’s operational performance was subdued, with profitability coming below consensus estimates, said ICICIdirect.┬а
Footfalls are yet to recover completely compared to the pre-Covid levels, which is causing a major hindrance for the recovery of its profitable segment general merchandise & apparel, ICICIdirect said.
No new trigger seems to be emerging for the time being, said JM Financial, which has a target of Rs 4,535 on DMart.
HDFC Securities has a ‘sell’ rating on the stock with a target price of Rs 2,950. Kotak Institutional Equities has a fair value for DMart at Rs 3,725. Nuvama Institutional Equities sees the stock at Rs 4,310. Motilal Oswal has a target of Rs 4,100 on the scrip while Prabhudas Lilladher sees the stock at Rs 5,121.┬а
ICICIdirect said DMart has been a consistent compounder with stock price increasing at 35 per cent compounded annually in the last five years.┬а
“DMart continues to remain IndiaтАЩs most profitable low-cost retailer and a strong play on IndiaтАЩs retail growth story and a key beneficiary of unorganised to organised segment shift. However, we believe current valuations captures most positives,” it said while suggesting a target of Rs 4,900 on the stock said.┬а
Motilal Oswal Securities said that the recovery in the revenue per store indicates that DMart has reached above the pre-Covid level but nearly 20 per cent higher average store size and weak demand in non-food category are impacting its revenue productivity adversely on a per square feet basis, it said.
This brokerage is expecting FY23 store additions to be at 45 from 40 earlier and is factoring in FY22-24 Ebitda and PAT growth of 45 per cent and 51 per cent, compounded annually, respectively.
Calling DMart’s Q2 numbers as a mixed bag, Kotak Institutional Equities said lower-than-expected gross margin (GM) and higher-than-expected other operational expenses drove a 7 per cent Ebitda miss.
DMart posted a same store sale growth (SSSG) of 41.6 per cent on a weak Covid impacted base in H1FY23, it said while modestly tweaking its FY2023-25 EPS.
