Supermart’s Avenue stock price fell 2 percent at the beginning of trading on July 12 after the company reported June quarter income.
The company on July 10 reported a major increase in 132.3 percent year-on-year in Mandiri profit at Rs 115.13 Crore, driven by a low base in the year to year period, but was influenced by restrictions on the number of hours of shop operation because of the second wave of Covid-19.
Mandiri revenue from operations at the RS 5,031.75 Crore in Q1 FY22 grew 31.3 percent compared to last year’s quarter, the company said in the BSE archiving.
Read – Avenue Supermarts Q1 Results | D-Mart Operator’s profit jumped 132% to RS 115 Crore, EBITDA rose 103%
The broker’s house has maintained a buying call in the stock behind the weak Q1 results, which leads to trimming consensus estimates with another 8% for the full year.
Morgan Stanley has reduced the stock to the same weight because Q1 income passes estimates & consensus. It will wait for a better entry point because of the lack of short-term triggers.
The company’s results are below expectations on the back of a lower dirty margin. Home broking lowered EPS FY22 estimates by 7.9% to reflect lower margins in Q1. It feels like the impact of the margin will be the one-off as a consequence of covid restrictions.
Broking House keeps a poor performance rating because the company reports 22-quarter dirty margins of 12.4 percent, income growth benefits due to low.
This shop requires 45 days of operational time without obstacles to returning to the Pre-Covid level.
Regardless of the big challenge, we remain optimistic about the long-term potential D’Mart behind 1) Increasing the scale and scope of DMART Ready 2) Expanding offers on the Ready Dmart application to enter general goods, fresh food and vegetables 3) Growth of General Merchandise Sales On the bottom basis, 4) focus low value daily and 5) Stable store expansion plan.
We believe the bill / shop / day will normalize after restrictions regarding locking minimize but the value of the bill is expected to remain higher than the pre covid level due to the inflation environment.
We expect Dmart to provide income / Pat CAGR FY20-23E 24% each, factoring 30/40 additions and 50% SSSG in FY22E / FY23E. Unlike other retailers, groceries such as Dmart have seen fast recovery after restrictions related to Covid is revoked and an increase in healthy margins.
Expensive assessment; Moderate risk in growth, due to strong traction for online retailers in the post-covid world; And the presence of deep pocket players such as Amazon and Reliance Retail limit short-term increases.
At 9:16 a.m., Avenue Supermarts quoted at Rs 3,327.25, down Rs 51.70, or 1.53 percent in BSE.
The highest touching stock was 52 weeks Rs 3,425 and 52 weeks low of Rs 1,900 on July 6, 2021 and July 20, 2020, respectively.
At present, it is traded 2.85 percent below 52 weeks and 75.12 percent above the lowest level of 52 weeks.
About Author
