DMart Q1 Results Review - Inline Print: HDFC Securities

HDFC Securities Institutional Equities

Avenue Supermarts Ltd.'s revenue grew 18.4% to Rs 137.12 billion in Q1. Sales density back to pre-pandemic times (up 4% YoY; ~Rs 35.62k/sq ft in Q1 FY25).

As expected, share from general merchandise and apparel continues to normalise upwards which is reflected in improving gross margins (up 34 bps to 14.9%; in-line).

The cost of retailing has inched up though as DMart continues investing in improving service levels and building future capabilities. Ebitdam as a consequence shed gross margin gains and remained largely stable at 8.9% (our estimate: 9%).

Store expansion remains measured (six stores added). DMart has fully utilised the QIP money (Rs 40.78 billion). With the current resources available (capital work in progress + Cash and Eq + FY25/26 CFO), it can add ~50-60 stores annually for FY25/26 (we build in 45-50 stores annually).

We largely maintain our FY25/26 EPS estimates. Reduce rating stands as risk-reward seems unfavorable at 75 times June-26 price/earning with a discounted cash flow-based target price of Rs 3,750/share, implying 60 times June-26 P/E.

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.