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Dolat Capital Report
Avenue Supermarts Ltd. reported healthy revenue growth of 17.5% YoY (estimate: 16%) in Q3 FY25. This has especially stood out against the backdrop of muted 14.2% growth in Q2 FY25 and expectations of further slowdown from here-on driven by Quick Commerce and decline in broader consumption.
DMart is well-poised to deliver 16-18% revenue/EPS compound annual growth rate (rationale below) led by sizeable opportunity in large food and grocery space.
We thus estimate Dmart to register revenue/Ebitda/adjusted profit after tax CAGR of 17/18/17% over FY24-27E. We broadly maintain our operating and financial estimates over FY24-27E (refer to table ‘Change in estimate').
We maintain our target multiple of 65 times PE and roll-forward it to FY27E versus H1 FY27E earlier leading to revised target price of Rs 4,500 versus Rs 4,120 earlier (including Rs 200 for ‘Dmart Ready').
Driven by a steep stock price correction of ~30% post Q2 FY25 and positive outlook, we upgrade our rating from ‘Reduce' to ‘Buy'. Dmart is currently trading at 64/54x FY26/27E EPS. We had recently added Dmart as part of Dolat's preferred picks strategy note post Q2 FY25.
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