Shares of Avenue Supermarts Ltd., the parent company of hypermarket chain D-Mart, fell 4% on Thursday, July 3, after the company’s first-quarter business update came in below expectations. The update drew a mixed response from the Street.The retail player reported a 16% year-on-year increase in standalone revenue, a figure that was slightly weaker than anticipated. During the quarter, D-Mart added nine new stores, taking its total store count to 424.
Brokerage firms remain divided on what lies ahead for the stock.
Macquarie kept its ‘Underperform’ rating intact, with a target price of ₹3,000 on Avenue Supermarts.The brokerage said that Q1 sales growth moderated slightly, compared to Q4, describing it as a “marginal miss.” However, it highlighted a healthy pace of store additions.
Given the product mix, Macquarie expects a sequential uptick in gross and EBITDA margins, as Q1 typically sees stronger margins.Goldman Sachs retained its ‘Sell’ recommendation, with a target price of ₹3,400, citing weaker-than-expected sales growth. While store additions were in line with expectations, the brokerage expects a year-on-year margin contraction.
Brokerage firms remain divided on what lies ahead for the stock.
Macquarie kept its ‘Underperform’ rating intact, with a target price of ₹3,000 on Avenue Supermarts.The brokerage said that Q1 sales growth moderated slightly, compared to Q4, describing it as a “marginal miss.” However, it highlighted a healthy pace of store additions.
Given the product mix, Macquarie expects a sequential uptick in gross and EBITDA margins, as Q1 typically sees stronger margins.Goldman Sachs retained its ‘Sell’ recommendation, with a target price of ₹3,400, citing weaker-than-expected sales growth. While store additions were in line with expectations, the brokerage expects a year-on-year margin contraction.
It also warned that D-Mart may continue to face stiff competition in large urban markets from quick commerce players.
Morgan Stanley also maintained its ‘Underweight’ rating, with a target price of ₹3,260 per share.
CLSA, on the flip side, gave the stock an ‘Outperform’ rating with a target price of ₹5,549, even though the company’s standalone revenue came in 2% below its own estimates.
Of the 31 analysts tracking Avenue Supermarts, 13 of them have a ‘Sell’ recommendation on the stock, while nine each have a ‘Buy and a ‘Hold’ rating.
Shares of Avenue Supermarts Ltd. are currently trading 2.45% lower on Thursday at ₹4,284.80. The stock has climbed over 20% so far this year.
