Sell Avenue Supermarts, target price Rs 2700: HDFC Securities

HDFC Securities has sell call on Avenue Supermarts with a target price of Rs 2700. The current market price of Avenue Supermarts is Rs 4003.45. Time period given by analyst is one year when Avenue Supermarts Ltd. price can reach defined target.

Avenue Supermarts Ltd., incorporated in the year 2000, is a Large Cap company (having a market cap of Rs 258637.00 Crore) operating in Retail sector.

Avenue Supermarts Ltd. key Products/Revenue Segments include Income from Retailing and Other Operating Revenue for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 9243.72 Crore, up 18.26 % from last quarter Total Income of Rs 7816.44 Crore and up 21.83 % from last year same quarter Total Income of Rs 7587.32 Crore. Company reported net profit after tax of Rs 552.53 Crore in latest quarter.


Investment Rationale
Standalone revenue grew 17.8% to INR. 86bn. (FY19- 22 CAGR: 15%). Revenue/store seems to have caught up to pre-COVID levels, despite the steep pick-up in store additions. SSSG is likely to remain healthy. D-MART added 21/50 stores (net) in Q4/FY22. Building in revenue per sq. ft of ~INR.30k. Steady-state GMs (~14.9%) built in despite a higher essentials skew in mix. This is because discounting remain lower than pre-pandemic levels. Building in 60bp margin expansion YoY to 9%. (8.4% in Q4FY21.

Promoter/FII Holdings
Promoters held 74.99 per cent stake in the company as of 31-Mar-2022, while FIIs owned 8.83 per cent, DIIs 6.77 per cent.