Prabhudas Lilladher Assigns Buy On Retail Sector Large Cap Stock, Sees 27% Potential Gains

Broking firm Prabhudas Lilladher assigned a "Buy" on Avenue Supermarts Ltd. for a target price of Rs. 4,447/share. Given the target price, it could give a decent return up to 27%, if stock is purchased at the current market price. Avenue Supermarts is a retail sector stock primarily engaged in the business of organized retail and operates supermarkets under the brand name of D-Mart. It is a large-cap stock having a market capitalisation of Rs. 2,28,409 crore.

Margin miss led by non FMCG, EPS cut by 4-5%, Buy for a target price of Rs. 4447/share

Prabhudas Lilladher said, "We cut EPS estimates of D'Mart by 4/5% for FY24/25 and target price to Rs4447 (Rs4561 earlier) following disappointing margin performance led by 1) 30% higher bill cuts/store but 22.8% lower average bill value in 2H23 2) decline in share of higher margin general merchandise and apparel in 2H23 and 3) benefit from higher store openings in mature clusters. We believe rising salience of D'Mart ready and delay in general merchandise recovery will impact margins further in FY24."

It added, "We factor in 13% growth in Bills cuts but 6% decline in average bill value (6% higher than 2H levels). We now build in 30/20bps decline in GM/EBIDTA in FY24 before it starts recovering in FY25. We now estimate 16.4% PBT growth in FY24 and 21.5% over FY23-25. We believe D'Mart has a huge runway to grow with 1500+ store potential and scale up in D'Mart Ready. Retain Buy for LT gains."

Stock Overview- Performance & Returns

The last traded share price of the stock is Rs. 3,523.40/share, down 4.19% from its previous close of Rs. 3,677.55/share.

The stock recorded its 52 week high on 2 September 2022 at Rs. 4,609/share and 52 week low on 16 May 2022 at Rs. 3,186/share, respectively.

The stock has fallen 4.2% in the past 1 week. It has given 9.06% positive return in 1 year, 50.97% in 3 years and 137.19% in 5 years, respectively.

Disclaimer - The stock has been picked from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.