Shares of Radhakrishna Damani-owned company Avenue Supermart (DMart) lost their early gains in Monday’s business and slipped into the red mark.
Avenue Supermarts, owned by retail store DMart, has performed well in the last quarter of FY 2020-21 despite the second wave of Covid-19. In Q4, DMart saw a 52.7% jump in net profit and net profit of the company stood at Rs 414 crore, compared to only Rs 271 crore in the same quarter last year.
Whereas, the company says that 80% of its stores have been affected by Covid’s second wave. Operations in Q4 increased the company’s revenue by 18.4% to Rs 7,411.6 crore as against Rs 6,256 crore in the March quarter of last year.
DMart’s earnings before interest, tax depreciation and amortization ie EBITDA stood at Rs 613 crore in Q4 of FY21, compared to only Rs 417 crore in Q4 of last year. That is, the company’s EBITDA grew by 47% on an annual basis in the March quarter. Whereas, the company’s EBITDA stood at 8.3% as against 6.7% in Q4 last year.
The company released the March quarterly results, stating that since March 2021, the second wave of Covid-19 has affected 80% of its store work, and Covid has been able to open stores for an average of 4 hours a day due to restrictions. This can have a negative impact on the company’s revenue.
Even after the great performance, the stock of the company is under pressure today. The company’s guidance has been weak, which has shown an impact on the performance of the stock today. Company management says that the second wave of Covid-19 will have an impact on the company’s performance. There will also be pressure on the company’s revenue in the first quarter of the current financial year.
Axis Securities says that due to the second wave of Covid-19, there will be an impact on the operation of the company’s stores. Apart from this, the company is also having to compete with other competitors.
Should you invest in this stock
Kotak Securities Has cut the revenue estimate of the stock by 6-18 per cent for this financial year. Kotak Securities has given a sell-off on the stock keeping the new fair value at Rs 1950 per share.
Axis Securities Has reduced the rating of the stock and reduced its target price to Rs 2850 per share. There itself Motilal Oswal Has neutralized the rating of this stock while Yes Securities Add rating of this stock has given a target of Rs 3205 for it. while Prabhudas Liladhar Giving a Buy rating to DeMart, it has given a target of Rs 3360.
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