Avenue Supermarts will announce its September quarter results on October 14. Net profit for the DMart operator is estimated at Rs 675 crore in Q2 FY24, as per mean consensus of three brokerage firms. The net income number is expected to fall 4.1 percent on a year-on-year (YoY) basis and by 0.2 percent sequentially.
Avenue Supermarts is expected to report a consolidated revenue of Rs 12,592 crore in the same period. The sales number is expected to increase 18.4 percent YoY basis and 6.1 percent on a quarter-on-quarter (QoQ) basis. Operating margin for the retail company is forecasted to be at 8.2 percent, showing a 24 basis points decrease YoY and a 58 basis points decline on a QoQ basis.
Kotak Institutional Equities expects EBITDA margin to be down on account of unfavourable seasonality, said the firm in a report dated October 5.
Avenue Supermarts has already reported standalone revenue for the quarter, earlier this month. Standalone revenue from operations for the Radhakishan Damani-stock stood at Rs 12307.72 crore in the July-to-September quarter, said Avenue Supermarts in its Q2FY24 update. The number represents an 18 percent YoY increase in standalone sales for the company.
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The update further said that total stores as of September 30 stood at 336. Motilal Oswal expects annual store additions of 40 by FY24 end.
JP Morgan looks at Avenue Supermarts as an exciting play in the underpenetrated but fast-growing organized retail industry in India. The brokerage firm likes the company’s execution capabilities, single format focus, healthy profits, prudent store expansion strategy and strong focus on customer satisfaction.
However, the foreign brokerage firm believes that even though medium-term revenue growth prospects remain intact, rising competitive intensity in the organized and online grocery space may affect margin trajectory over the medium term. JP Morgan has an underweight rating on the stock with a target price of Rs 3,200.
Furthermore, analysts are also worried about the slow pick-up in D-Mart's general merchandise and apparel business segment post-COVID. This segment has higher margins compared to FMCG and staples but has been underperforming.
As of October 13, the Avenue Supermarts has 9 sell calls and 6 hold calls.
Avenue Supermarts operates the popular supermarket chain, D-Mart. The company's business model is based on providing a range of products at competitive prices all under one roof, including food and non-food fast-moving consumer goods, apparel, and electronics.
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