Hold Avenue Supermarts; target of Rs 3942: Prabhudas Lilladher

hold

Prabhudas Lilladher's research report on Avenue Supermarts

Avenue Supermart (D’Mart) has added 50 stores in FY25 (17 in last 15 days) of FY25 which will accelerate sales growth from ~17% to 20-21%. However higher overheads and funding cost will take its toll on reported earnings. We expect D’Mart to have a capex of Rs240bn in FY25-30 as against Rs120bn in past 5 years which can’t be met from internal accruals. We expect D’Mart to look for Rs60-80bn fund infusion in FY26 given limited cash in balance sheet and long gestation of setting up stores (Land, building etc over 2.5 years). We cut EPS by 0.7/6.1/7.1% for FY25/26/27.

Outlook

We have DCF based target price of Rs 3942 (Rs3958 earlier). However, the stock at 76xFY27EPS with 14% EPS CAGR over FY25-27, leaves little room for further re-rating. Retain Hold.

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Avenue Supermarts - 04042025 - prabhu