Buy Avenue Supermarts; target of Rs 3296: Prabhudas Lilladher
Prabhudas Lilladher is bullish on Avenue Supermarts has recommended buy rating on the stock with a target price of Rs 3296 in its research report dated January 10, 2021.
January 14, 2021 / 09:01 PM IST
Prabhudas Lilladher's research report on Avenue Supermarts
3Q21 results were strongly driven by a surge in festival shopping resulting in a beat across EBITDA/PAT. Worst seems over although near term outlook remains mixed due to disruption due to night curfew and weekend closure in certain cities, supply issues in non FMCG goods and mix impact as apparel, laundry, footwear and travel segments remain impacted. However, the long term story is getting better with 1) increasing focus on Ecom which can provide further scale to already existing supply chain 2) Everyday value focus and 3) expectations of D’Mart doubling stores over FY20-25. We estimate 29.8% PAT CAGR over FY20-23 and 28.9% over FY20-25, as we increase EPS between 4.9-5.7% over FY21 to 23. and 2.9% for FY21/22/23. BUY
We retain Buy and increase our target price to Rs3296 (Rs2316 earlier) despite 52% appreciation since our upgrade in October. As post covid recovery catches up, D’Mart seems gaining confidence on expansion of D’Mart ready with 1) launch in Ahmedabad, Bangalore and Hyderabad 2) allocation of store space for operations and 3) extending D’Mart ready to general merchandise (Home furnishings, small electrical and Kitchen aids) and fruits and veggies.
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