Moneycontrol

Budget 2023Budget 2023

PARTNERS

  • Tata AIA Life Insurance
  • Hafele
  • Motilal Oswal
  • SMC Global Securities Limited
  • SBI Life
  • DSP Mutual Fund
Upcoming Event : LeapToUnicorn - mentoring, networking and fundraising for startups. Register now

DMart Shares: Q2 is good, but it is not enough for investors given stock’s pricey valuations

The DMart stock had risen as much as 25% in October ahead of the Q2 results. So far this calendar year, the stock has appreciated by around 80%

October 18, 2021 / 04:00 PM IST

Avenue Supermarts Ltd’s shares jumped almost 11% on the National Stock Exchange in morning trade on Monday, touching a new 52-week high. Avenue runs the DMart chain of stores. However, the stock gave up all those gains and fell by more than 6 percent later on.

This is after the September quarter results (Q2FY22) announced on Saturday were seen to be broadly better than analysts’ expectations. As such, some profit booking was expected, given the stock’s sharp run-up at a time when there hasn’t been a significant improvement in its business prospects. Note that the DMart stock had risen as much as 25 percent in October ahead of the Q2 results. So far this calendar year, the stock has appreciated by around 80 percent. Needless to say, valuations are expensive and, unsurprisingly, many analysts have made a note of that.

Also read: What should investors do with Avenue Supermarts stock

Edelweiss Securities Ltd analysts said in a report on October 16, “We are downgrading Avenue Supermarts (DMart) from ‘Hold’ to ‘Reduce’ as the stock’s recent run-up and valuation (92 times FY23E EV/Ebitda) have happened without any fundamental change in business prospects.”