📷 Image Credits: Mint
On Monday, DMart, also known as Avenue Supermarts Ltd, witnessed a significant surge in its share price by over 4% during opening trades. This increase came after the company reported its Q1 results for the year. The DMart share price opened at ₹5,126.45, showcasing a 3.69% rise from the previous close of ₹4,943.65. Subsequently, the share price escalated by 4.4% to reach highs of ₹5,164 on the NSE. The financial performance reported by DMart revealed a notable 17.5% rise in consolidated net profit, amounting to ₹773.8 crore when compared to ₹658.8 crore during the same period last year. Moreover, the operating revenue of the hypermarket chain operator surged by 18.6% to ₹14,069 crore in the Q1 of the current fiscal year from ₹11,865.4 crore in the corresponding quarter last year.
The standalone Earnings Before Interest Tax Depreciation and Amortization (Ebitda) of DMart exhibited an 18% year-on-year growth, reaching Rs1220 crore. Analysts described this growth as inline with the consensus estimates. Jefferies India Pvt Ltd analysts stated that the Ebitda aligned with their predictions. The revenue growth of 18% year-on-year was deemed healthy due to store additions and low-double-digit SSG. Despite a slightly soft SSG, analysts attributed the same to recent larger store additions and a decrease in demand for discretionary goods. DMart managed to uphold its Ebitda, a positive outcome recognized by analysts at Motilal Oswal Financial Services.
However, it was noted that store productivity remained below the pre-covid average while six new stores were added this quarter, signifying an increase compared to the same quarter last year. Analysts at Jefferies expressed belief that store additions and mix concerns are diminishing. Nevertheless, the valuation of DMart at 90 times one-year forward price to earnings is currently at a substantial premium to peers and embodies an abundance of positive news. Tweaking their FY25-27 earnings estimates slightly, Jefferies maintained a Hold rating with a marginally higher target price of Rs4,600. Likewise, Motilal Oswal Financial Services maintained their FY25 and FY26 estimates, forecasting a CAGR of 22% and 31% in revenue and net profit over FY24-26, aided by growth in footprints and revenue productivity.
Furthermore, Nuvama Institutional Equities analysts modified revenue forecasts for FY25 and 26 by 1% and 3%, respectively. They value the company at 75 times price to earnings and set a target price of ₹5,091. Despite steady operating performance, analysts at Centrum Stock Broking increased earnings estimates for FY25 and FY26 by 5.7% and 5.1%, respectively. With an ADD rating, the revised target price stands at Rs5,428, implying 75 times FY26 estimated earnings per share. As DMart’s share price experienced a notable upsurge post Q1 results, investors and analysts are closely monitoring the stock’s performance to determine whether to Buy, Sell, or Hold.
