Avenue Supermart founded in the year 2000, is a large-cap company in the Retail sector with a market capitalization of Rs 216,162.41 crore. Avenue Supermarts, a DMart operator, reported a 132 percent increase in standalone net profit for the June quarter, at Rs 115 crore. In the previous year, it was Rs 50 crore.
Total revenue increased by 31% to Rs 5,032 crore in June 2020, compared to Rs 3,833 crore in June 2019. In Q1FY22, earnings before interest, taxes, depreciation, and amortization (EBITDA) were Rs 221 crore, up from Rs 109 crore in the previous quarter. In Q1FY22, the EBITDA margin was 4.4 percent, up from 2.8 percent in Q1FY21. In Q1FY22, basic earnings per share (EPS) were Rs 1.78, up from Rs 0.77 in Q1FY21.
After the first quarter's earnings, brokerages had the following to say about the stock and the company:
Rating: Downgrade to equal-weight
Morgan Stanley cut the stock to equal weight after the company's first-quarter profits fell short of expectations. Due to a lack of near-term catalysts, it will wait for a better entry point.
The target price (TP) from the brokerage is Rs 3,268 per share.
The company's earnings fell short of projections due to a decreased gross margin. According to Goldman Sachs, the company's earnings were below forecasts due to a reduced gross margin. Due to a reduced margin in Q1, it cut its FY22 EPS expectations by 7.9%. As a result of COVID limits, it appears that the margin impact will be one-time.
With a target price of Rs 3,690 per share, the brokerage has issued a 'buy' call.
According to Jefferies, the company shocked negatively with a 22-quarter low gross margin of 12.4 percent, while revenue growth benefited from a low base.
It estimates that the store will require 45 days of uninterrupted operations to return to its pre-Covid state. With a target price of Rs 2,300, Jefferies rates the stock as underperform.
Due to dismal Q1 results, Citi maintained a 'sell' rating on the company with a target price of Rs 2,210. Consensus projections for the entire year were cut by another 8%.
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