DMart share price: Avenue Supermarts share price plunged over 9% on Monday after the DMart retail chain operator’s Q2 results missed analysts’ expectations. DMart share price dropped as much as 9.37% to ₹4,143.60 apiece on the BSE.
Ace investor Radhakishan Damani-owned Avenue Supermarts disappointed in September quarter earnings with slower than expected revenue and net profit growth and higher costs.
Avenue Supermarts reported a consolidated net profit of ₹659.58 crore in the second quarter of FY25, registering a modest growth of 5.77% from ₹623.56 crore in the same quarter last year.
The retail giant’s revenue in Q2FY25 rose by 14.4% to ₹14,444.5 crore from ₹12,624.4 crore. Year-on-year (YoY).
At the operational level, EBITDA in Q2FY25 stood at ₹1,094 crore, as compared to ₹1,005 crore in the corresponding quarter of last year, while EBITDA margin narrowed to 7.6% from 8.0%, YoY.
The Q2FY25 like-for-like revenue growth for 2 years and older stores was at 5.5%.
Avenue Supermarts’ below expectations Q2 results led multiple brokerages to downgrade their ratings and cut their target prices on the stock.
JPMorgan believes Avenue Supermarts Q2 results were below expectations, while the extent of SSSG moderation was a surprise.
The brokerage firm cut FY25 and FY26E EBITDA estimates by 8% and 10%. It downgraded Avenue Supermarts shares to Neutral and cut the target price to ₹4,700 from ₹5,400 earlier.
According to Bernstein, the Avenue Supermarts Q2 revenue growth was slowest in 4 years and the LFL growth was slowest in three years.
Nuvama Institutional Equities cut FY25E revenue, EBITDA and PAT estimates by 3%, 4% and 7% building-in the impact of online grocery players and weakness in Dmart’s H1FY25 showing. The brokerage firm retained ‘Hold’ rating and reduced DMart share price target to ₹5,040 from ₹5,183 earlier.
“DMart posted a weak Q2FY25 owing to lower productivity of stores. LFL growth of 5.5% YoY is markedly lower than Q1FY25’s 9.1% YoY; H1FY25 LFL, thus, works out to 7.4%. Higher opex growth, aimed at improving service levels, has compressed EBITDA margin. DMart Ready’s growth slowed to 22% YoY in H1FY25 from 32% in FY24. Management acknowledged that online grocery formats are having a noticeable effect on its high-performing metro stores.
Antique Stock Broking noted that the company’s revenue performance was impacted by increasing competition from the online grocery format (especially quick commerce) in metro cities. A marginal recovery in general merchandise & apparels resulted in gross margin expansion (21 bps YoY). However, higher overheads due to improved servicing levels resulted in EBITDA margin contracting (27 bps YoY).
“Post the 2QFY25 performance and factoring competition from online groceries, we cut our EBITDA estimates by 6%-10% over FY25-27E. The key monitorable for DMart would be its ability to fight competition from online groceries and recovery in general merchandise & apparel,” said the brokerage firm.
It maintained ‘Hold’ recommendation and cut Dmart share price target to ₹5,026 from ₹5,098 earlier.
At 10:00 am, Avenue Supermarts shares were trading 7.18% lower at ₹4,244.00 apiece on the BSE.
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