D-Mart dives after poor December quarter results: What should you do with the stock?

Avenue Supermarts has reported earnings before Interest, Tax, Depreciation and Amortization (EBITDA) at Rs 965 crore, as against Rs 866 crore in the corresponding quarter of the last year.

‘);
$(‘#lastUpdated_’+articleId).text(resData[stkKey][‘lastupdate’]);

//if(resData[stkKey][‘percentchange’] > 0){
// $(‘#greentxt_’+articleId).removeClass(“redtxt”).addClass(“greentxt”);
// $(‘.arw_red’).removeClass(“arw_red”).addClass(“arw_green”);
//}else if(resData[stkKey][‘percentchange’] = 0){
$(‘#greentxt_’+articleId).removeClass(“redtxt”).addClass(“greentxt”);
//$(‘.arw_red’).removeClass(“arw_red”).addClass(“arw_green”);
$(‘#gainlosstxt_’+articleId).find(“.arw_red”).removeClass(“arw_red”).addClass(“arw_green”);
}else if(resData[stkKey][‘percentchange’] 0)
{
var resStr=”;
let secglbVar = 1;
var url = ‘//www.moneycontrol.com/mccode/common/saveWatchlist.php’;
$.get( “//www.moneycontrol.com/mccode/common/rhsdata.html”, function( data ) {
$(‘#backInner1_rhsPop’).html(data);
$.ajax({url:url,
type:”POST”,
dataType:”json”,
data:{q_f:typparam1,wSec:secglbVar,wArray:lastRsrs},
success:function(d)
{
if(typparam1==’1′) // rhs
{
var appndStr=”;
//var newappndStr = makeMiddleRDivNew(d);
//appndStr = newappndStr[0];
var titStr=”;var editw=”;
var typevar=”;
var pparr= new Array(‘Monitoring your investments regularly is important.’,’Add your transaction details to monitor your stock`s performance.’,’You can also track your Transaction History and Capital Gains.’);
var phead =’Why add to Portfolio?’;
if(secglbVar ==1)
{
var stkdtxt=’this stock’;
var fltxt=’ it ‘;
typevar =’Stock ‘;
if(lastRsrs.length>1){
stkdtxt=’these stocks’;
typevar =’Stocks ‘;fltxt=’ them ‘;
}

}

//var popretStr =lvPOPRHS(phead,pparr);
//$(‘#poprhsAdd’).html(popretStr);
//$(‘.btmbgnwr’).show();
var tickTxt =’‘;
if(typparam1==1)
{
var modalContent = ‘Watchlist has been updated successfully.’;
var modalStatus = ‘success’; //if error, use ‘error’

$(‘.mc-modal-content’).text(modalContent);
$(‘.mc-modal-wrap’).css(‘display’,’flex’);
$(‘.mc-modal’).addClass(modalStatus);

//var existsFlag=$.inArray(‘added’,newappndStr[1]);
//$(‘#toptitleTXT’).html(tickTxt+typevar+’ to your watchlist’);
//if(existsFlag == -1)
//{
// if(lastRsrs.length > 1)
// $(‘#toptitleTXT’).html(tickTxt+typevar+’already exist in your watchlist’);
// else
// $(‘#toptitleTXT’).html(tickTxt+typevar+’already exists in your watchlist’);
//
//}
}

//$(‘.accdiv’).html(”);
//$(‘.accdiv’).html(appndStr);
}
},
//complete:function(d){
// if(typparam1==1)
// {
// watchlist_popup(‘open’);
// }
//}
});
});
}
else
{
var disNam =’stock’;
if($(‘#impact_option’).html()==’STOCKS’)
disNam =’stock’;
if($(‘#impact_option’).html()==’MUTUAL FUNDS’)
disNam =’mutual fund’;
if($(‘#impact_option’).html()==’COMMODITIES’)
disNam =’commodity’;

alert(‘Please select at least one ‘+disNam);
}
}
else
{
AFTERLOGINCALLBACK = ‘overlayPopup(‘+e+’, ‘+t+’, ‘+n+’)’;
commonPopRHS();
/*work_div = 1;
typparam = t;
typparam1 = n;
check_login_pop(1)*/
}
}

function pcSavePort(param,call_pg,dispId)
{
var adtxt=”;
if(readCookie(‘nnmc’)){
if(call_pg == “2”)
{
pass_sec = 2;
}
else
{
pass_sec = 1;
}
var postfolio_url = ‘https://www.moneycontrol.com/portfolio_new/add_stocks_multi.php?id=’+dispId;
window.open(postfolio_url, ‘_blank’);
} else
{
AFTERLOGINCALLBACK = ‘pcSavePort(‘+param+’, ‘+call_pg+’, ‘+dispId+’)’;
commonPopRHS();
/*work_div = 1;
typparam = t;
typparam1 = n;
check_login_pop(1)*/
}

}

function commonPopRHS(e) {
/*var t = ($(window).height() – $(“#” + e).height()) / 2 + $(window).scrollTop();
var n = ($(window).width() – $(“#” + e).width()) / 2 + $(window).scrollLeft();
$(“#” + e).css({
position: “absolute”,
top: t,
left: n
});
$(“#lightbox_cb,#” + e).fadeIn(300);
$(“#lightbox_cb”).remove();
$(“body”).append(”);
$(“#lightbox_cb”).css({
filter: “alpha(opacity=80)”
}).fadeIn()*/

$(“.linkSignUp”).click();
}

function overlay(n)
{
document.getElementById(‘back’).style.width = document.body.clientWidth + “px”;
document.getElementById(‘back’).style.height = document.body.clientHeight +”px”;
document.getElementById(‘back’).style.display = ‘block’;
jQuery.fn.center = function () {
this.css(“position”,”absolute”);
var topPos = ($(window).height() – this.height() ) / 2;
this.css(“top”, -topPos).show().animate({‘top’:topPos},300);
this.css(“left”, ( $(window).width() – this.width() ) / 2);
return this;
}
setTimeout(function(){$(‘#backInner’+n).center()},100);

}
function closeoverlay(n){
document.getElementById(‘back’).style.display = ‘none’;
document.getElementById(‘backInner’+n).style.display = ‘none’;
}
stk_str=”;
stk.forEach(function (stkData,index){
if(index==0){
stk_str+=stkData.stockId.trim();
}else{
stk_str+=’,’+stkData.stockId.trim();
}
});

$.get(‘//www.moneycontrol.com/techmvc/mc_apis/stock_details/?classic=true&sc_id=’+stk_str, function(data) {
stk.forEach(function (stkData,index){
$(‘#stock-name-‘+stkData.stockId.trim()+’-‘+article_id).text(data[stkData.stockId.trim()][‘nse’][‘shortname’]);
});
});

function redirectToTradeOpenDematAccountOnline(){
if (stock_isinid && stock_tradeType) {
window.open(`https://www.moneycontrol.com/open-demat-account-online?classic=true&script_id=${stock_isinid}&ex=${stock_tradeType}&site=web&asset_class=stock&utm_source=moneycontrol&utm_medium=articlepage&utm_campaign=tradenow&utm_content=webbutton`, ‘_blank’);
}
}

Avenue Supermarts fell close to 4 percent in early trade on January 16 after the company’s December quarter net profit failed to meet analyst estimates.

The owner and operator of DMart chain of retail stores reported a 6.6 percent rise in consolidated post-tax profit at Rs 590 crore for the quarter ended December 2022 as against Rs 553 crore a year back. Analysts had forecast net profit of Rs 646.5 crore.

Total revenue for Avenue Supermarts for the October-December quarter stood at Rs 11,569 crore, as against Rs 9,218 crore last year, the company said in a stock exchange filing on January 14, indicating a 25.5 percent on-year growth.

Earnings before interest, tax, depreciation and amortization (EBITDA) for the company during the period under review came in at Rs 965 crore, as against Rs 866 crore in the corresponding quarter last year, up by 11.4 percent. EBITDA margin, however, declined to 8.3 percent from 9.4 percent.

Catch all the market action on our live blog

Here is what brokerages have to say about stock and the company post December quarter earnings:

Prabhudas Lilladher

The broking house has cut the EPS estimates of D’Mart by 4.2 percent/4.3 percent/4.0 percent for FY23/24/25 and the target price to Rs 4,675 (Rs 4854 earlier) following disappointing margin performance in 3Q23 (106 bps YoY EBIDTA margin decline to 8.3 percent).

Mix deterioration due to tepid growth in Apparel and general merchandise impacted margins.

Cost of retail also moved up by 50bps YoY as operating leverage failed to benefit in a festival quarter.

The broking firm believe high inflation has impacted the discretionary spends in Q3 that surprisingly impacted even a deep value retailer like D’Mart.

Given just 22 store openings in 9M23, broking house expect addition of 18 stores in Q4.

It estimates 27.8 percent CAGR in net profit over FY23-25 (excluding of Rs 1407.7 million tax write-back in FY23) and believe D’Mart has a huge runway to grow with 1500+ store potential (current stores 306) in a consolidated market and scale up in D’Mart Ready.

Any meaningful correction can be used as a good entry point. Retain Buy.

Morgan Stanley

The brokerage house has downgraded the stock to ‘equal-weight’ and cut the target price to Rs 3,853 from Rs 4,590 per share.

The growth and margin was a disappointment, while top-line growth moderated on a 3-year basis.

The Q3 EBITDA margin was below estimates, reported CNBC-TV18.

Motilal Oswal

The broking house maintained ‘neutral’ rating on the stock with a target price of Rs 4,050, given its expensive valuation

The recovery of revenue per store indicates that DMart has surpassed the pre-Covid level; however, a nearly 20 percent higher average store size and weak demand in the non-food category affected revenue per sq ft.

Broking house reduced its FY23E store additions to 40 from 45 earlier and trimmed FY23/24 PAT by 8 percent/3 percent, resulting in an EBITDA/PAT CAGR of 28 percent/26 percent over FY23-25.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.