Prabhudas Lilladher has given Accumulate recommendation for Avenue Supermarts with a target price of Rs. 5345 in its research report issued on Jan 08, 2022

Prabhudas Lilladher’s research report on Avenue Supermarts

We remain optimistic on D’Mart post 3Q results as it has reported strong growth despite higher inflation and lower mobility impacting sales of non- essentials like apparel and general merchandise (440 bps decline in sales share to 22.9% in FY21 also). 3Q margin expansion of 26bps led by cost control shows the robust business model despite deterioration in sales mix and operating cost of 17 new stores opened in 3Q (other expenses up 15.2% YoY and 12.6% QoQ versus just 5.9% increase YoY in 1H22). With 3rd covid wave coming in full fury, we expect near term uncertainty and increased share of essentials in sales mix. We are increasing store openings in FY22 to 40 (35 earlier) even as we factor in slight moderation in margins even as high inflation will give some sourcing benefits to D’Mart.

Outlook

We believe bill cuts/store/day will normalize over FY23 and bill value will get a flip from higher inflation. We expect strong growth to sustain as D’Mart is yet to fully sweat 67 stores opened in past 24 months. We estimate 31% PAT CAGR over FY20-24 (48.3% over FY22-24) and remain positive for long term. Retain Accumulate with target price of Rs5345 (Rs5364 earlier).

More Info on Trent

At 16:00 hrs Avenue Supermarts was quoting at Rs 4,633.05, down Rs 97.80, or 2.07 percent.

It has touched an intraday high of Rs 4,798.90 and an intraday low of Rs 4,620.00.

It was trading with volumes of 37,235 shares, compared to its thirty day average of 27,064 shares, an increase of 37.58 percent.

In the previous trading session, the share closed up 0.54 percent or Rs 25.55 at Rs 4,730.85.

The share touched its 52-week high Rs 5,899.90 and 52-week low Rs 2,610.80 on 18 October, 2021 and 29 January, 2021, respectively.

Currently, it is trading 21.47 percent below its 52-week high and 77.46 percent above its 52-week low.

Market capitalisation stands at Rs 300,117.25 crore.

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