D-Street gives thumbs up to DMart sales numbers

BL Chennai Bureau | | Updated on: Jul 04, 2022

Analysts, however, divided on performance

Shares of Avenue Supermarts jumped sharply after the company reported strong standalone revenue figures. In a disclosure to the stock exchanges, Avenue Supermarts Ltd, which owns and operates retail chain DMart, has reported a nearly two-fold rise in its standalone revenue from operations to ₹9,806.89 crore for the first quarter ended June 30, 2022. The company had revenue from operations of ₹5,031.75 crore in the April-June quarter a year ago, Avenue Supermarts informed the BSE in a regulatory filing.

Underperforms Sensex

The stock rose nearly 5 per cent to ₹3,554.70 on the BSE after opening firm at ₹3,538. However, profit taking coupled with mixed views on its performance dragged the stock to a low of ₹3,460.65 before settling the day at ₹3,495.60, up 3.21 per cent over the previous day's close.

The stock underperformed the Sensex by a huge margin in calendar 2022 so far. As against the Sensex's fall of 10 per cent, DMart slumped 25.7 per cent.

Analysts are divided on the performance of Damani-owned company.

Morgan Stanley remains bullish

Morgan Stanley, while retaining its Overweight on Avenue Supermarts with a price target of ₹4,332, said standalone first quarter revenue of ₹9,800 crore was up 95 per cent y-o-y (on weak base quarter), led mainly by a 21 per cent increase in store count. The revenues in Q1 were at the highest quarterly level so far and were up 19 per cent on a three-year CAGR basis, it added.

Motilal Oswal stays Neutral

Motilal Oswal, on the other hand, is Neutral on DMart with a price target of ₹3,387. DMart reported a weak revenue for Q1-FY23, continuing the trend in the last two-three quarters, said the domestic brokerage. 

While overall growth looks strong, adjusted for the store addition, estimated like-to-like revenue declined by 13 per cent in Q1-FY23 (the company doesn’t provide quarterly same store sales growth).

Another domestic brokerage gave “Add” rating on the stock with a target price of ₹3,600 (DCF-based). “Prima facie, the sales/sq ft number is a shade disappointing, given: multiple rounds of price hikes taken by FMCG companies; footfalls normalising back to pre-Covid levels; and higher-than-expected store opening,” it said.

The company will declare its first quarter results on Saturday (July 9).

Published on July 04, 2022
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