Avenue Supermarts, the operator of hypermarkets chain D-Mart, today entered the list of top 15 most valued companies by market capitalisation as its m-cap topped Rs 3 lakh crore-mark as the stock jumped to a fresh record high.
It was even one of the less corrected stocks during March 2020 crash driven by COVID crisis. The stock corrected nearly 30 odd percent in around a month during February-March 2020 and since then there is no looking back. It has gained 158.6 percent from that March 2020 closing low of Rs 1,824 and gained 70 percent in the current year 2021.
On October 11, Avenue Supermarts rallied 7.06 percent to end at a record closing high of Rs 4,719.60, with a market capitalisation of Rs 3,05,710.79 crore, becoming the 15th most valued company by market cap, after Asian Paints, HCL Technologies, Wipro, and Kotak Mahindra Bank, Bharti Airtel, SBI, Bajaj Finance, ICICI Bank, HDFC, HUL, Infosys and HDFC Bank.
These companies have a market cap in the range of Rs 3-9 lakh crore, while Reliance Industries (with nearly Rs 18 lakh crore) and TCS (Rs 13.6 lakh crore) are the only companies having more than Rs 10 lakh crore in market cap.
The stock hit a fresh record high of Rs 4,837 on Monday and gained 12 percent in the last three consecutive sessions. The re-opening of the economy and recovery in the company's earnings, unique business model, cash-rich status with zero debts, expected strong demand in festival and likely healthy numbers in Q2FY22 supported the rally.
"Unique business model, consistent operating margins, promoter track record and efficient supply chain along with favourable scenarios for FMCG led retail business helped the stock rally," said Jay Prakash Gupta, Founder at Dhan.
Dhan further said one thing which is unique for Avenue Supermarts is its distribution channel- Factory/Farm to D-Mart to Consumer. "This efficiency adds up to its operating margin. Another thing unique is its Real Assets location. Most of the stores are located at strategic locations and are owned, providing both capital appreciation and return on capital invested on Real Estate. The third important aspect is its financial leverage. Company is debt-free and cash-rich unlike most of the other retail chains."
Going forward, he feels retail format businesses like Avenue Supermarts may face some challenges from new-age companies like Big Basket, Grofers. "A lot would depend on how efficiently Avenue Supermarts can adapt to the changes. D-Mart Ready is an initiative towards it."
Last week, the company announced its provisional numbers for the September 2021 quarter, wherein it said standalone revenue at Rs 7,649.64 crore increased from Rs 5,218.15 crore in a year-ago period, with a total number of stores as of September 2021 at 246.
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