Hold Avenue Supermarts; target of Rs 4748: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Avenue Supermarts with a target price of Rs 4748 in its research report dated October 13, 2024.

Broker Research

October 14, 2024 / 11:59 IST

hold

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Avenue Supermarts

We cut our FY25/26/27 EPS by 5.0%/5.5%/4.9% and rating from Accumulate to Hold with target price of Rs4748 (Rs5168 earlier). Q2FY25 revenue/PAT were miss on our estimate by 3.4%/12.5%. This follows disappointing retail metrics as 1) Quick commerce and other online grocery platform players impacted sales in metro cities 2) lower SSG of 5.5% in 2Q vs 9.5% SSG in 1Q 3) tepid growth parameters with growth of 1.2% YoY in Sales/store, 1.6% YoY in bills/store/day and just 0.5% increase in sales/sq ft. Cost of retail inched up by 65bps as D’Mart added 6 stores in 2Q25. General merchandise and apparel continue to improve in 2Q, 1H sales proportion at 23.45% improved by 24bps YoY; however, the loss of sales to value formats like Zudio, and Reliance Trends seems irreversible.

Outlook

D’Mart has added 2 stores in Oct beginning and has started offering same day delivery in D’Mart Ready, which will further boost sales post 21.5% growth in 1H25. We factor in 45/50 store additions, 18.4% CAGR in sales, with stable margins at ~8.1% to enable 18.5% PAT CAGR over FY24-27. D’Mart LT growth story remains intact with 1500+ store potential in duopoly market and gradual scale up in D’Mart Ready. We would keenly watch out for sales trends in festival season. HOLD with DCF based TP of Rs4748 (Rs5168 earlier).

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