Avenue Supermarts Ltd. share price target

Avenue Supermarts (DMART) 4QFY21 results was better than expectations. Business recovery during Jan-Feb'21 remained strong driven by 6% SSSG. However, the month of Mar'21 witnessed subdued demand due to local level restrictions on store operation. Positively, DMART added 13 stores (of size c. 50k square feet) during the quarter (22 stores in FY21). Operating profit margin expanded due to better revenue mix and cost control. However, management guides that currently more than 80% stores are operating for significantly lower number of hours due to lockdown/restriction imposed by state governments. For example, in Maharashtra (c.30% revenue contribution),...

We cut our EPS estimates by 20.1%/4.7% in FY22/23 due to 1) Weak 1H outlook due to local restrictions 2) lower store opening assumptions by 5 stores each for FY22/23 3) interplay between average bill value and number of orders 4) sales mix impact in FY22 due to lack of non-essential sales....

Avenue Supermarts Limited is an India-based company, which owns and operates DMart stores. DMart is a supermarket chain that offers customers a range of home and personal products under one roof. We recommend a BUY with a target price of Rs 3250.

In Q3FY21, we expect construction companies to return to topline growth driven by near optimum labour availability, pick-up in execution. For real estate companies, key highlight will be strong residential sales volumes growth led by factors like pent up demand, benign interest rates, measures like stamp duty cut in Maharashtra. However, financial numbers of real estate companies will look optically weak due to rental waiver in retail...

We continue to maintain with BUY rating on the stock with a revised target price of Rs 3250 (48x FY23E EV/EBITDA) versus earlier TP of Rs. 3,100.

DMart reported healthy revenue growth of 10%YoY post de-growth in the last two quarters on account of Covid-19 led disruption in the industry. The overall sales & sales mix is now trending very close to pre-covid level except for discretionary products like Apparel and footwear, which is taking more time to recover, as per management. The company has added only 1 store Vs 7 stores YoY duie to Covid-19 led disruptions (Added only 9 stores in 9MFY21 Vs 20 stores YoY). However, new store additions are likely to accelerate given recent QIP of Rs.4,098cr. DMart is now considering leased stores also to accelerate growth. DMart, improved its focus on E-Com business and has...

leasing of D'Mart store space for E-com operations. We retain Buy and increase our target price to Rs3296 (Rs2316 earlier) despite 52% appreciation since our upgrade in October. As post covid recovery catches up, D'Mart seems gaining confidence on expansion of D'Mart ready with 1) launch in Ahmedabad, Bangalore and Hyderabad 2) allocation of store...

Avenue Supermarts (DMART) 3QFY21 results was better than expectations driven by meaningful recovery during the festive months of Oct-Nov'20. Re-introduction of nightcurfew and weekend closure by the government due to COVID concerns impacted business-recovery during Dec'20. DMART added only 1 store during the quarter. DMART-Ready has been launched in select pin codes of Ahmedabad, Bangalore and Hyderabad. We read this as positive-sign; solving for convenience through disruptive business models is not just a trend but a business reality. Strong recovery during festivals is a testimony that DMART'S business is under no risk due to COVID induced...

We are initiating coverage on Avenue Supermart Limited (DMART) with a BUY recommendation and a Target Price of Rs 3,100 which implies 16% upside from the current levels.