Radhakishan Damani’s Avenue Supermarts, the firm that runs the DMart hypermarket chain, final week stated that its standalone income from operations was Rs 7,303 crore for the January-March quarter, up 18% on-year basis. However, along with the positive organization update, the firm also stated that with growing coronavirus circumstances its organization will continue to be dependent on how the pandemic treads. Currently shares of the firm trade at Rs 2,830 a piece, down from their March 2021 highs of Rs 3,286 per share.
Lockdown deja-vu might hit next quarter earnings
The firm has sounded an alarm of caution more than the growing coronavirus circumstances. “Due to increased Covid-19 cases since March 2021, several restrictions have been put in place in certain cities and towns where we operate. The number of cities and stricter enforcements keep growing every day,” Avenue Supermarts stated in the update. The firm expects the scenario to stay the similar at least till the finish of April.
“Our business will continue to be dependent on how the pandemic trends further and the consequent restrictions for operating our stores,” they added. The organization has been hit owing to restrictions varying from area to area, retailers closing on specific days to abrupt shutdowns for a continuous week or more.
Strong income development
During the final quarter, Avenue Supermarts continued to develop strongly. Its income from operations was 2% ahead of what analysts at Global brokerage and investigation firm Goldman Sachs had estimated. Further Avenue Supermarts added 13 more retailer areas in the course of the quarter, which is once again more than what analysts at Goldman Sachs had predicted. The brokerage firm stated that the robust fourth-quarter income and retailer addition demonstrate Avenue Supermart’s capability to drive customer footfalls due to eye-catching cost positioning compared to other on the internet and offline peers. Additional, they stated that the widening E-commerce attain of Avenue Supermarts also offsets the loss of offline sales.
Avenue Supermarts stated that retailers older than 2 years saw 6% development for the months of January-February 2021 compared to the similar period final year. The second wave of the coronavirus has also attempted to clamp down on the recovery. “These stores saw a negative growth of 9.4% for the first 15 days of March 2021 as compared to the first 15 days of March 2020,” they added. However, in the second half of March 2021, the figures rebounded owing to a low base impact.
Still a ‘Buy’ contact
Although Goldman Sachs nevertheless remains confident about the stock but the organization update offered by Avenue Supermarts, has forced the brokerage firm to modify its estimates. “We incorporate higher Januar-March quarter revenues and the negative impact of the lockdown in the first quarter of FY22 in our model and change our FY21E-29E EPS estimates by +1 to -11%. On our revisions, our 12-month target price goes to Rs 3,290 (from Rs 3,472; -5%),” analysts at Goldman Sachs wrote. Higher-than-anticipated competitors, greater-than-anticipated losses in on the internet organization and greater-than-anticipated disruptions due to COVID-19 associated lockdown measures are some of the dangers that Goldman Sachs sess aligned with Avenue Supermarts.
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