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Accumulate Avenue Supermarts target of Rs 5359: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Avenue Supermarts with a target price of Rs 5359 in its research report dated October 16, 2021.

October 18, 2021 / 03:38 PM IST
 
 
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Prabhudas Lilladher's research report on Avenue Supermarts


We are cutting D’Mart to Accumulate from Buy despite 9.2-11.7% upgrade in FY22-24 estimates and increase in DCF based target price to Rs5359 (Rs4601 earlier) given 26% spurt in stock price in past 6 trading sessions. D’Mart 2Q results depicted strong post Covid recovery with mature store sales growth of 23.7% in Sept, gains from operating leverage with just 3.2% YoY growth in other expenses and soft launch of D’Mart Ready in Surat and Vadodara. With 4 and 8 new stores addition in 1Q and 2Q and capex of ~Rs8.5bn, D’Mart remains on track to add ~35 stores during FY22.



Outlook


We believe bill cuts/store/day will normalize with lower restrictions however the bill value will get a flip from higher inflation. We expect strong growth as D’Mart is yet to fully sweat 70 stores which were added in FY20/21 and YTD. We estimate 48% PAT CAGR over FY21-24 and remain positive for long term. However, we cut our rating to Accumulate (Buy earlier) given sharp jump in stock price recently.



For all recommendations report, click here


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first published: Oct 18, 2021 03:38 pm

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