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Sell Avenue Supermarts; target of Rs 2160: HDFC Securities

HDFC Securities is bearish on Avenue Supermarts has recommended sell rating on the stock with a target price of Rs 2160 in its research report dated January 11, 2021.

January 14, 2021 / 09:02 PM IST
The four stocks they exited are Macpower CNC Machines, NDR Auto Components, Novartis India and RSWM, according to Dolat Capital.

The four stocks they exited are Macpower CNC Machines, NDR Auto Components, Novartis India and RSWM, according to Dolat Capital.

 
 
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HDFC Securities' research report on Avenue Supermarts


D-MART finally hits the growth phase (after a disappointing 1HFY21). The grocer clocked a healthy 10% topline growth (HSIE: 8.5%). While gross margin delivery was strong (15.1% vs HSIE: 14.8%), its underpinnings remain weak (on the back of lower discounting in staples). Non-essential sales remain weak. EBITDAM expanded 52/256bp YoY/QoQ to 9.3% courtesy strong cost control. (HSIE: 9%). While we increase our FY22/23 EPS estimates by 5-6% resp. to account for marginally higher revenue/sq. ft, we downgrade the stock to Sell (Earlier Reduce) as the recent run-up leaves no room for an investment case (DCF-based TP: 2,160/sh – implying 34x FY23 EV/EBITDA + 2x FY23 sales for e-comm business).


Outlook


We downgrade the stock to Sell with a DCF-based TP of Rs. 2,160/sh, implying 34x FY23 EV/EBITDA for std biz + 2x sales for e-comm business).


For all recommendations report, click here


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first published: Jan 11, 2021 05:23 pm

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