Avenue Supermart Ltd. (D-Mart) shares declined over 8% after the company posted weaker-than-expected results for the second quarter of this financial year. The company reported a 5.8% year-on-year increase in net profit to Rs 659.44 crore, missing analysts’ estimates of Rs 812 crore. This marked a significant shortfall for the parent company of D-Mart.
Revenue for the quarter rose by 14.4% year-on-year to Rs 14,444.50 crore, again falling short of analysts’ projections of Rs 14,597 crore. The company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased 8.8% year-on-year to Rs 1,093.77 crore, with an EBITDA margin contraction to 7.6% from 8% a year earlier. Analysts had expected an EBITDA of Rs 1,210 crore and a margin of 8.30%.
As of 9:15 am the shares were trading 8.06% lower at ₹4,204.00 on NSE
Following the release of the weaker Q2 results, several brokerages downgraded their outlook on Avenue Supermart:
- Morgan Stanley downgraded Avenue Supermart to ‘Underweight’ and cut the target price to Rs 3,702. The brokerage expressed concerns over management commentary, raising doubts about the company’s ability to maintain a 20% top-line growth trajectory, which could result in further de-rating of the stock.
- JPMorgan also downgraded the stock to ‘Neutral’ and revised the target price from Rs 5,400 to Rs 4,700. The brokerage lowered its revenue and same-store sales growth (SSSG) forecasts by 4-6% for FY25-26E, while cutting its EBITDA estimates by 8% and 10% for FY25 and FY26, respectively.
The downgrades by major brokerages highlight concerns about D-Mart’s future growth prospects, adding pressure to the company’s stock performance in the coming days.
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