DMart's Q2 revenue up 36 pc; Avenue Supermarts stock surges 4%

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DMart's Q2 revenue up 36 pc; Avenue Supermarts stock surges 4%

Shares of Avenue Supermarts gained 4 per cent today after the operator of the supermarket chain D-Mart announced a 36 per cent increase in standalone revenue for the quarter ended September 2022. Avenue Supermarts stock rose by 3.98 per cent to a new intraday high of Rs 4601.9 against the previous close of Rs 4425.65 on the BSE. Avenue Supermarts shares have gained for the last three sessions.

The large cap stock is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. The stock has gained 5.65 per cent in a year and was down 3.74 per cent in 2022. The stock has climbed 5 per cent on the start of the festive season in a week.

Revenue in Q2 was up to Rs 10,384. 66 crore was lost against 7,649. In the last year, there were 64 crore. Revenue almost doubled compared to the pre-pandemic period of Q 2 FY 20 when it stood at Rs 5,949. 01 crore. The total number of stores as of September 2022 was 302.

The financial earnings for the July-September quarter are yet to be released. The stock is likely to shine during the festive season.

Prabhudas Lilladher is a 'buy' rating on the stock with a target price of Rs 5,118. With the festive demand hitting, D-Mart will see strong growth in the zero Covid restrictions environment. It has a huge growth runway, given the low probability of heightened competition in modern trade and 1,500 store potential in existing clusters. The brokerage said that 42 percent of the PAT CAGR will be reached over FY 22 - 25. The strategy of Everyday Low Prices EDLP will push sales during the current high inflation scenario and attract middle-class retail from unorganised retail, it added.

ALSO READ: Avenue Supermarts stock climbs 5% on two-fold rise in Q1 revenue.

Motilal Oswal Financial Services analysts are neutral on the stock. They have assigned a target price of Rs 4,100. Revenue growth at 36 per cent YoY was 6.4 per cent less than the estimate. It continued its healthy store additions. It added 18 out of a total of 40 stores factored in FY 23. In the last three years, it saw a strong 60 percent 93 percent cumulative store footprint additions, despite the COVID-led lockdown, according to the financial services firm.

DMart said its standalone revenues increased nearly two-fold to Rs 9,806. In the June quarter, 89 crore came from Rs 5,031. The year-ago quarter saw 75 crore. EBITDA margins in Q 4 were 10.3 per cent, compared to 4.4 per cent in the year-ago quarter. The standalone PAT margin stood at 6.9 per cent in Q 1 FY 23 compared with 2.3 per cent in Q 1 FY 22.