Share price of Avenue Supermarts opened lower on January 4 after the company's October-December (Q3) quarter business update failed to meet analyst expectations.
The hypermarket chain operator reported standalone revenue from operations at Rs 11,304.58 crore for quarter ended December FY23, increasing 25 percent from Rs 9,065 crore in same period last year.
This was 6.2 percent below estimates, said analysts at Motilal Oswal Financial Services (MOFS).
At 11:19 am, the stock was quoting at Rs 3,987 apiece on the NSE, down by 1.84 percent. In the last one year, the scrip has shed 16 percent.
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Store additions were also slower. D-Mart added only 4 stores in Q3FY23 taking the total count to 306. "Estimates stood at 12," said MOFS. In Q1, the company had added 10 stores, followed by 8 in Q2.
Following this, global brokerage firm Macquarie has cut FY23/FY24/FY25 earnings per share (EPS) estimates by 5 percent each. “Slower recovery is a near-term risk,” it noted. The firm has an ‘Outperform’ call on the stock with a target price of Rs 4650.
Morgan Stanley also flagged off slow growth by the company versus pre-COVID trends. On a three-year CAGR basis, revenue is up 18.7 percent, lower than 20.4 percent in Q2, it noted. It has a target price of Rs 4590 on the stock with an Overweight call.
Meanwhile, MOFS has a 'neutral' rating on the counter. Its channel checks suggest that the price hike were taken in the staple segment between 3-6 percent in Q3. "This should have supported the overall revenue growth as the continued soft performance in the Value segment may have hurt the ‘non-Staple’ category segment," said MOFS analysts.
In Q2FY23, food category had contributed to 54.75 percent of the company's revenue, non-foods 20.5 percent, while general merchandise and apparel contributed the rest 24.75 percent.
"Discretionary items in the non-FMCG segment have not come back to pre-pandemic levels. As and when footfalls increase, we assume we should be inching towards our pre-pandemic contributions for apparel and general merchandise sales," Neville Noronha, chief executive officer and managing director had said after Q2 results.
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