Buy Avenue Supermarts; target of Rs 4471: Geojit Financial Services

Geojit Financial Services is bullish on Avenue Supermarts has recommended buy rating on the stock with a target price of Rs 4471 in its research report dated October 29, 2024.

Broker Research

October 29, 2024 / 14:49 IST

Buy

26 Aug, 2025 12:21

Volume

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Geojit Financial Services research report on Avenue Supermarts

Avenue Supermarts Ltd. (DMart) owns & operates India’s most profitable supermarket chain, DMart. It provides products like food, non-food (FMCG), general merchandise & apparel through 377 stores (total 15.8mn sq. ft). Revenue grew by 14%YoY, while gross margin improved by 20bpsYoY to 14.2% due to an improved product mix. Like-for like growth (for stores operational for at least 24months) declined to 5.5% from 8.6% YoY. EBITDA grew by 10%YoY as EBITDA margin declined by 30bps YoY to 7.9% due to higher employee costs and other expenses. General merchandise & apparel category mix which commands a higher margin has improved to 23.45% in H1FY25 vs. 23.21% YoY. The upcoming festive season is expected to support further improvement in the mix. DMart added 12 stores in H1FY25 vs. 12 YoY (41 stores in FY24), which, along with the likely improvement in demand, will aid improvement in topline growth. DMart is gradually improving its E-Com business channel, ‘DMart Ready’, currently available in ~24 cities, which now contributes ~2.7% of total revenue. DMart Ready business grew by 21.8% YoY in H125.

Outlook

DMart currently trades at 71x 1Yr Fwd PE. We revised our target to Rs.4,471 (earlier Rs. 5,310) by valuing on a DCF basis which implies 64x on Sept 2026 EPS.

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