DMart rises 3% post Q1 business update; here's what analysts say

NEW DELHI: Radhakishan Damani, who owns and operates retail chain DMart, saw his fortunes rising nearly Rs 4,400 crore notionally in Monday's trade as shares of Avenue Supermarts (DMart) climbed over 3 per cent, following its June quarter business update.

Damani owned roughly 65.2 per cent stake in DMart as of March 31, as per Trendlyne, which was valued at Rs 1.47 lakh crore as of Monday's intraday price compared with Rs 1.43 lakh crore as of Friday, up Rs 4,373 crore.

During the session, the scrip rose 3.13 per cent to Rs 3,493 on BSE. This is even as the brokerages were mixed on the business update.

Morgan Stanley has maintained its 'overweight' stance on the stock, noting revenues in Q1 were at the highest quarterly level so far and were up 19 per cent on a three-year CAGR basis. The brokerage has a target of Rs 4,332 on the stock.

For Motilal Oswal Securities, DMart numbers were weak, in line with the trend seen in the last two-to-three quarters.

Avenue Supermarts said its standalone revenues jumped nearly two-fold to Rs 9,806.89 crore in the June quarter from Rs 5,031.75 crore in the year-ago quarter.

"Standalone revenue grew 2 times YoY to Rs 9,810 crore, 70 per cent over 1QFY20 (or pre-Covid) levels and 11 per cent below our estimate. While overall growth looks strong, adjusted for the store addition, estimated LTL revenue declined by 13 per cent in 1QFY23," it said, adding that the company does not provide quarterly same-store sales growth.

Motilal Oswal Securities said its channel checks indicated that Dmart's soft store performance can be attributed to the high consumer traction on online platforms as its higher revenue contribution stores are largely based in metros and Tier I cities.

Meanwhile, DMart added 10 stores in the June quarter, taking its total store count to 294.

Motilal Oswal is factoring in 40 store additions, or 18 per cent of total stores, in FY23. In the last three years, DMart has added 60 per cent of stores and 95 per cent area, despite the Covid-led lockdowns.

"This is higher than our expectation of four store additions in 1QFY23 and its typical heavy store additions in the second half of the fiscal," Motilal said.

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