Citi has maintained sell rating with a target at Rs 1,550 per share.
Avenue Supermarts share price added more than 3 percent intraday on January 13 after THE company reported strong numbers for the quarter ended December 2019 (Q3FY20).
The company's Q3FY20 standalone net profit rose 53.3 percent at Rs 394.3 crore versus Rs 257.1 crore, while revenue was up 23.9 percent at Rs 6,751.9 crore versus Rs 5,450.9 crore, YoY.
Its earnings before interest, tax, depreciation and amortisation (EBITDA) rose 30.8 percent at Rs 593.1 crore and margin was up 50 bps at 8.8 percent, YoY.
Morgan Stanley has maintained underweight call on the stock with a target OF Rs 1,500 per share.
The research house feels that the earnings expectations appeared elevated for the stock and changing retail landscape will have implications for its revenue growth & margin.
The increased price competition may blunt the company’s first-mover advantage and DMart Ready may dilute margins on cannibalisation of in-store sales, it added.
Citi has maintained a sell rating with a target at Rs 1,550 per share.
The company's profits are slightly below, while focus shifts to the fundraising, said Citi.
The research firm lowered revenue / EPS estimates by 3-5 percent, while absolute multiples (74x 1-year Forward P/E) may be unwarranted.
The attractive land parcels may be difficult to replicate and scale-up in future, it added.At 09:46 hrs, Avenue Supermarts was quoting at Rs 1,906.45, up Rs 29.70, or 1.58 percent on the BSE.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.