Reduce Avenue Supermarts; target of Rs 2063: Dolat Capital Market
Dolat Capital Market recommended reduce rating on Avenue Supermarts with a target price of Rs 2063 in its research report dated October 20, 2020.
Oct 21, 2020 / 01:05 PM IST
Dolat Capital Market's research report on Avenue Supermarts
Dmart reported a 12% YoY decline in revenues due to intermittent lockdowns, weak general merchandise sales and sluggish footfalls. EBITDA/APAT decline was higher at 37% due to lower gross margin and negative operating leverage. GM were impacted by lower sales of high margin general merchandise and apparel sales (22 vs. 27-28%). Food (52%) and FMCG (20%) categories were the quickest to bounce with sales up on a YoY basis in Sep’20. However, Q2FY21 performance was still a marked improvement over Q1FY21.
We initiate coverage on Dmart with Reduce rating and TP of Rs 2,063 @ 60x Sep-22E EPS. Our reduce rating is primarily on account of rich-valuations of Dmart and rightly so in back-drop of large addressable opportunity and thus multi-year growth story of company.
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