Avenue Supermarts gains on solid Q2 update; analysts expect strong growth in festival season
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The company informed the stock exchanges that the total number of D-Mart stores at the end of the September quarter stood at 302
Shares of Avenue Supermarts Ltd, which owns and operates the retail chain D-Mart, opened 2 percent higher on October 4 after the company reported a 36 percent year-on-year jump in standalone revenue from operations at Rs 10,385 crore in the quarter ended September 30, 2022.
At 9.30 am, the scrip was quoting at Rs 4,500 on the National Stock Exchange. In the past six months, the stock has gained 10 percent but for the year, it is down 4.5 percent.
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In Q2FY21 and Q2FY22, the company reported a standalone revenue of Rs 5,218.15 crore and Rs 7,649.64 crore, respectively.
The company informed the stock exchanges that the total number of D-Mart stores at the end of the quarter stood at 302.
According to domestic brokerage firm Prabhudas Lilladher, 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 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” Prabhudas Lilladher said in a recent note.
Analysts at Motilal Oswal Financial Services are “neutral” on the stock. They have a target price of Rs 4,100 on the stock.
Standalone revenue growth at 36 percent YoY was 6.4 percent below their 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 brokerage firm said.
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