The Economic Times daily newspaper is available online now.

    D-Mart reports strong Q2 updates, but why analysts are divided over Damani's biggest bet

    Synopsis

    D-Mart continued its healthy store additions. It added eight stores in 2QFY23, taking its total count to 302. It has added 18 out of a total of 40 stores factored in FY23, said the brokerage which has a neutral view on the stock.

    D-Mart reports strong Q2 updates, but why analysts are divided over Damani's biggest betAgencies
    Despite a strong update for the September 2022 quarter by Avenue Supermarts, brokerage firms remain divided over Radhakishan Damani's flagship company. They expect a 7-35 per cent move in the stock.

    Avenue Supermarts, which owns and operates retail chain D-Mart, has reported a 35.75 per cent rise in standalone revenue from operations to Rs 10,384.66 crore for the second quarter of the current fiscal, according to an exchange filing.

    "The company had revenue from operations of Rs 7,649.64 crore in the year-ago period, it said. The company had a total of 302 stores at the end of September.

    In the July-September quarter of FY 2020-21, Avenue Supermarts' standalone revenue was at Rs 5,218.15 crore, the company added. "It was at Rs 5,949 crore in the pre-pandemic July-September quarter of FY 2019-20."

    Domestic brokerage firm Motilal Oswal said that same store sales continue to post a decline. Blended revenue per sq. feet grew 2 per cent on a yearly basis to Rs 33,7272, which was 10 per cent more than pre-covid levels (Q2FY20).

    D-Mart continued its healthy store additions. It added eight stores in 2QFY23, taking its total count to 302. It has added 18 out of a total of 40 stores factored in FY23, said the brokerage which has a neutral view on the stock.

    "We factor in 40 store additions, 19 per cent which can increase the footprint in FY23. In the last three years, it saw a strong store and footprint additions, despite the COVID-led lockdown," it added with a target price of Rs 4,100 on the stock.

    On the other hand, HBSC is highly positive on the stocks citing believing that an exceptional growth phase is just starting, led by higher pace of network additions. It has reiterated a buy call on the stock with a target price of Rs 6,000.

    Brokerage sees imminent recovery in non-discretionary sales, benefits of high inflation, beginning of a stronger growth phase, penetration-led multi-decade growth opportunity, perceived expensiveness appears misleading and unique compounding construct as the key triggers for the company.

    "Expensive valuation and a ne COVID-19 wave is the key downside risk to our call," it said.

    Ace investor Radhakishan Damani, who is also promoter of the company, holds 437,444,720 shares or 67.5 per cent stake in the company, which is worth Rs 1.95 lakh crore.

    Another broker Prabhudas Lilladher has upgraded its EPS estimates and believes that the company will gain significantly in FY23 from throughput in stores opened during Covid.

    "We remain confident that the company’s strategy of 'Everyday Low Prices' (EDLP) will push sales during the current high inflation scenario and will attract the middle-class to organized retail from unorganised retail," it said.

    With a strong balance sheet and the efficient execution capability of the management, we expect sustained growth in coming years, it added with a buy call but a revised target price of Rs 5,118, which was Rs 4,636 earlier.

    (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)



    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more


    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

    Stories you might be interested in