In a “bear case” scenario, Emkay expects the stock to fall to levels of ₹2,200, which is exactly 50% lower from current levels.
The brokerage wrote in its note that with a forward price-to-earnings valuation of 70 times, the stock is pricing in a business that DMart needs to become and not what it currently is.
India’s Quick-Commerce players are now pricier by only 4% to 13% than DMart on a monthly basket, with the gap disappearing after bank discounts, according to Emkay, who added that the bull cuts per square feet is down 6% since financial year 2020, even as the dark store count went up to 2,000 from 421 earlier.Dmart still covers only 50% of India’s total retail addressable market, despite store count rising to 500 in the recent times, Emkay’s note stated.
At a price-to-earnings growth ratio of 4.2 times, compared to Trent and Titan trading at 2.6 times, the market is paying a perefection for a business that needs structural reform.
11 analysts each out of the 29 that have coverage on Avenue Supermarts, have a “buy” and “hold” rating on the stock. Seven have a “sell” rating on the stock.
After having opened with losses of 2.5% on Monday, shares of Avenue Supermarts have trimmed some of those losses and are now trading 1.1% lower at ₹4,349.3.
