DMart's standalone revenue growth was a tad soft at 16.2% YoY. Growth was impacted by 100-150 bps due to deflation in many staples and non-food products. The same-store sales growth for two-year and older stores (~327 or 77% of stores) was 7.1% YoY. Yet, Revenue/sqft growth was 1.5% and rev/store 1.9% YoY. This implies softer revenue contribution from newer stores in the brokerage's view.
NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Dolat Capital Report
Avenue Supermarts Ltd.'s Q1 FY26 results were inline and soft. Standalone Revenue/gross profit /Ebitda/adjusted profit after tax were at 16.2/14.1/7.6/2.3% YoY. Earnings growth was in single digit for four consecutive quarters and ~9% over FY23-25.
The business model remains strong to deliver 14-16% revenue/ EPS CAGR over the long-term, led by sizeable opportunity in large F&G space. Accelerated store expansion, soft base, category-mix improvement, new launches & built-up in DMart Ready are potential triggers.
While increased competition from Qcom presents a short-term challenge, we believe this pressure will ease within two-four quarters due to weak profitability and funding crunch (after which DMart shall benefit even more). In the interim DMart is competing effectively.
We trim our FY26/27E APAT by 1/3% to factor weak margins. Reiterate ‘Reduce' rating with revised target price of Rs 4,065 (including Rs 200 for DMart Ready) valuing at 65x FY27E standalone EPS (earlier Rs 4,150 @ 65x FY27).
Our rating reflects near-term weak performance, competition from Qcom and rich valuations; bias remains positive.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
