A clutch of top domestic brokerages retained their ratings on DMart’s stock with cosmetic changes. While Motilal Oswal maintained a buy view on DMart shares, Nuvama retained a ‘Hold’ stance. Kotak Institutional Equities, on the other hand, reiterated a ‘Sell’ view.
Amid a mixed response to DMart operator’s Q3 earnings from these brokerages, Avenue Supermarts’ shares jumped over 2.3% in the opening trade only to trim the gains later.
The company reported strong numbers for the quarter ended December, with the consolidated net profit rising 17% YoY to Rs 690.61 crore. Consolidated revenue from operations at Rs 13,572.47 crore, too, increased by more than 17% from the year-ago period. Earnings before interest, taxes, depreciation and amortization or EBITDA during the quarter grew by 16% YoY to Rs 1,119.89 crore.
Read more | DMart Q3 results: Consol PAT up 17% YoY to Rs 691 crore, revenue sees similar growth
Here’s what brokerages recommended:
Kotak Equities: Sell | Target: Rs 3,650
Kotak has cut the FY2024-26 EPS forecasts by 3-6% with the roll-forward to March driving a revised fair value of Rs 3,650 from an earlier target of Rs 3,600 even as it retains a ‘Sell’ view.”Dmart’s 3QFY24 revenue growth of 17.3% YoY was led by retail area addition of 12.6% YoY and SSSG (same-store sales growth). The GM print of 14.9% was flat YoY, driven by a stabilising GM&A mix after Diwali. However, non-FMCG sales were lower than expected in the festive season,” a Kotak note said.
The Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) margin at 8.3% was 33 bps below its estimates on account of higher-than-anticipated other expenses.
Nuvama: Hold | Target: Rs 4,089
Nuvama has maintained a ‘Hold’ rating on the stock, rolling over to 9MFY26 and valuing DMart at 70X PE (pre-covid average: 74X) yields. It has revised its price target to Rs 4,089. Avenue Supermarts’ Q3 performance was in line with Nuvama’s estimates.
Motilal Oswal: Buy | Target: Rs 4,700
Among top domestic brokerages, Motilal took a buy stance for a price target of Rs 4,700. The gap between revenue/sqft (up 4% YoY) and revenue/store (up 5% YoY) continues to shrink, indicating an improvement in the share of larger-format stores, marking a positive trend, Motilal said, adding that healthy cost efficiencies and a recovery in discretionary demand are likely to drive growth, going ahead.
Though, it has marginally cut PAT estimates for FY24/FY25, reducing them by 3%/1%.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
