Avenue Supermarts Ltd. share price target

Avenue Supermarts (DMART) 2QFY21 result was better than our estimates. Overall business reached c. 88% pre-covid level led by strong recovery in FMCG and staples while general merchandise and garment continues to face headwinds due to lower foot-fall. As a result, Inferior revenue mix led to decline in gross margins. Store addition rate remain robust (added 6 stores during 2Q vs 2 stores in 1Q). Interestingly; DMART shut down 2 stores (in Mira Road and Kalyan each) and converted them into fulfillment centers to support its online business. DMART also expanded online footprint to Pune. We have introduced FY23E in our estimates and upgrade our rating to BUY with a...

We attended the annual conference call on Avenue Supermarts (D-Mart) to get an insight into the outlook and challenges lying ahead owing to the Covid-19 pandemic. Majority of the questions (as anticipated) were pertaining to future plans regarding its e-commerce play (DMart Ready') and views on intensified competition from new entrants with deep pockets. The management reiterated its stance of not aggressively foraying into ecommerce play and rather focusing on further consolidating its position to be an eminent player in the brick & mortar format. Over the years, D-Mart, through its proven business model, has been able to maintain consistent...

5 August 2020 DMart has reopened most stores, and sales have reached ~80% across assortments as customer traffic is gradually returning to stores given the brands value offering. Same-store sales growth (SSSG) has fallen but is not concerning, excluding the high base of last year and select low-performing stores. Management indicated that in terms of store adds, it aims to make up for the lost period of lockdown with ~59 store additions over FY2122 (the next six quarters). B) It would focus on larger sized stores, predominantly in semi-urban and lower tier cities, that may have slightly sluggish metrics in the near term, but bring longer term growth, operating leverage, premiumization, and thus ROIC. However, it believes online is still restricted to the urban markets, where DMart Ready offers both delivery and pick-up options at more attractive pricing v/s online and would wait for the model to turn profitable.

from Hypermarts to Kirana and Ecom 2) slow pick-up in apparel and general merchandise 3) setback to Premiumisation as upper middle class cuts store visits 4) volatility due to localized lockdowns from time to time and 5) lower store openings in current year as Covid 19 has hit construction for 4 months. We assume addition of 20/40 stores in FY21/FY22 and decline of 6% in Bills/store/day and 4% in average bill value. D'Mart trades at 62xFY23 EPS. D'Mart is also experiencing with a convenience store in D'Mart Ready,...

Avenue Supermarts Ltd (DMart) owns & operates India's most profitable supermarket, DMart. It provides products like Food, Non-Food (FMCG), General Merchandise & Apparel through 216 stores (total 8mn sq. ft). We downgrade DMart to Reduce rating with new Target of Rs2,100...

Avenue Supermarts (DMART) 1QFY21 result was operationally in-line while PAT was better than expected due to higher other income. Store shutdowns, restrictions on selling high-margin non-essential products and strict social distancing norms inside the stores contributed towards dismal performance in Q1FY21. Online sale remain strong as customers preferred safety and convenience. Adding 2 stores of size 1 lakh sqft each is departure from DMART's usual strategy of opening 40-50k sqft size stores. Large-size stores should ideally be more profitable if the company maintains its usual inventoryturnout of 14x.Given the strength of DMART's balance sheet with Rs 29bn unutilized money from QIP, it would be opportune time to bargain real-estate and further...

As a result, revenue witnessed a 34% drop and estimated same-store sales growth (SSSG) fell -55%; the closure of the margin-accretive non-food section dragged down gross margins by ~220 bps, translating to 81% YoY decline in EBITDA. DMarts consolidated revenues fell 33% YoY to INR39b (6% below est.) on sales of mostly essential products witnessed at DMart stores and many stores remaining shut in the initial phase of the nationwide lockdown. Gross profit fell 42% YoY (in-line) and gross margins (GM) contracted 220bps YoY to 14.2% (90bp below estimate). This is attributable to the high- margin General Merchandise and Apparel sections of retail stores being closed during the lockdown and stores in some areas (with high local restrictions) continuing to operate sales only for essentials items. Subsequently, loss of INR3b in gross profit directly impacted EBITDA, which fell 81% YoY to INR1.1b (28% below est.); EBITDA margins contracted 740bps to 2.