Avenue Supermarkets | Business Upturn

Goldman Sachs cuts target price for DMart to Rs 3,425 from Rs 4,000 citing competitive pressure

Markets Desk — Wed, 11 Dec 2024 01:16:28 +0000

Goldman Sachs has maintained its ‘Sell’ rating on Avenue Supermarts (DMart) while reducing the target price to ₹3,425 from ₹4,000, citing increasing competitive challenges and a lack of differentiation in key market segments.

The brokerage has lowered its earnings estimates for DMart by 4.2%, 6.2%, and 6.1% for FY25, FY26, and FY27, respectively. Goldman Sachs notes that DMart has raised its grocery product price discount from approximately 15% over MRP in July 2024 to 25% in December 2024, highlighting intensified pricing pressure.

The report further states that DMart does not hold a significant competitive advantage in fresh food categories in urban areas, which are crucial for growth. Additionally, vast sections of India’s grocery market are not addressable by DMart’s current operating model, limiting its market reach.

Goldman Sachs believes that these factors are likely to challenge DMart’s ability to sustain its competitive moat and navigate the evolving retail environment effectively.

DMart’s revenue up by 46% to ₹9,065 crore in Q3 FY21-2022

News Desk — Sun, 02 Jan 2022 13:25:44 +0000

DMart, one of India’s largest retail chains in India, has posted a revenue of ₹9,065 crores for the quarter ending December Q3 of Financial Year 2021-22. This is a rise of 46% from ₹5,218 crores reported in the same quarter last year.

The revenue from operations for the Quarter Ended December 31, 2021, given above is subject to limited review by the statutory auditors of the company, DMart said in a press release. The total number of stores as of December 31, 2021, stood at 263, which is an addition of 17 stores from the previous quarter. On Friday, DMart shares closed 0.55% at ₹4,665 per piece on NSE. The shares have gained over 60% in 2021.

The staggering rally in the stock has meant that its promoter, Radhakishan S. Damani has broken into the elite club of the top 100 global billionaires in 2021. Avenue Supermarts Ltd, which owns and operates retail chain DMart has reported a jump of 113.2% net profit at ₹448.90 crores during the September quarter.

Promoted by Radhakishan Damani and his family, DMart retails basic home and personal products across markets which include – Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana, Chhattisgarh, NCR, Tamil Nadu, Punjab and Rajasthan. Damani now ranked 63rd on the Bloomberg Billionaires Index with $24.6 billion as his net worth.

DMart’s net profit rises 16% YoY & revenue by 11% in Q3 results

Devanshu Singla — Sat, 09 Jan 2021 10:31:59 +0000

The hyper retail chain DMart, owned by Avenue Supermarts on Saturday reported 16% rise in consolidated net profit at ₹447 crore in the December 2020 quarter as compared to ₹384 crore in December 2019. Total revenue has been increased by 11% to ₹7,542 crore as compared to ₹6,808 crore in the year-ago period.

Profit After Tax (PAT) margin stood at 5.9% in Q3FY21 as compared to 5.6% in Q3FY20.

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in Q3FY21 stood at ₹689 crore, as compared to ₹597 crore in the corresponding quarter of last year. EBITDA margin increased to 9.1% in Q3FY21 as compared to 8.8% in Q3FY20.

“The quarter has seen further improvement in our business and financial metrics. Our overall sales and sales mix is now trending very close to our usual times except for specific customer consumption changes post COVID-19. Apparel, laundry, footwear, travel and such relevant out of home usage categories are taking more time to recover,” said Neville Noronha, CEO & Managing Director, Avenue Supermarts Limited.

Noronha added that agile operating expenses management along with a good surge in festival shopping allowed his company to deliver a significantly better quarter than the previous quarters.

Dmart shares trade contrary to Q1 results in Financial Year 2021

Chittesh Dalmia — Mon, 13 Jul 2020 06:55:13 +0000

Dmart shares trade contrary to Q1 results in Financial Year 2020. Avenue Supermarts led DMart Q1 FY 21 results brought discomfort to its investors. The total revenues fell 33.22 per cent YoY to Rs 3,883 crore in June. Also quarter from Rs 5,815 crore in the year-ago quarter. The profit tumbled 88% to Rs. 40 crore.

Standalone earnings per share fell as much as 86% to ₹0.77 in the June quarter from ₹5.37 in the same period last year. Earnings were hit due to the unprecedented crisis in the wake of the coronavirus pandemic, which led to a sharp drop in footfalls and impacted sales, especially those of non-essential products.

While that is heartening, it’s the drop in the profit margins that’s upsetting. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin contracted by a massive 747 basis points year-on-year to 2.84%. One basis point is one-hundredth of a percentage point. Ebitda margin for the March quarter stood at 6.7%.

Dmart In Trade

In a report, dated 11 July, analysts from JM Financial said. “There appears to have been no saving in ‘other expenses’. Whatsoever, despite some stores being closed for a few weeks altogether”. On a standalone basis. Other expenses rose 22% year-on-year during the June quarter.

Avenue was able to add two stores in the last quarter, taking the store count to 216 as on 30 June. It has recovered about 80% or more of pre-covid sales in most stores where operations are allowed unhindered. “This is a concern, as it implies store level revenue decline of about 20% to continue for the September quarter, even for stores which are fully functional,” said analysts from Credit Suisse Securities (India) Pvt. Ltd in a report on 13 July.

“In this disruptive time, the market share in large city retail is being taken up by mom-and-pop stores (kirana). And e-commerce. The longer the impact of COVID-19, the higher are the chances of some consumers. Which will permanently shift to e-commerce”. Pointed out Credit Suisse analysts.

The stock’s expensive valuations show that investors are ignoring the near-term hit to earnings. Based on Friday’s closing price, the stock trades at about 72 times estimated earnings for 2022, according to Bloomberg data.

Moreover, demand for discretionary products is still biased. Especially for the non-FMCG (fast-moving consumer goods) categories. Which typically enjoy higher margins.

On July 13 11:23 am, the stock was trading at Rs. 2,242.00 on the National Stock Exchange. Therefore, Dmart shares trade.