Stock To Buy: ICICI Direct Suggests Buying This Stock With Rs. 4700 Target Price

Reputed Brokerage firm ICICI direct has recommended investors buying the stocks of Avenue Supermarts (ASL). The company is following robust store operating metrics. Avenue Supermarts has added 10 new D-Mart outlets taking the total store count to 294 with total business area now crossing 12 million sq ft.

Stock To Buy: Company performance, Target Price, Current Market Price

The Current Market Price (CMP) of Avenue Supermarts (ASL) is Rs. 3942. ICICI direct has estimated a Target Price for the stock at Rs. 4700. This stock has the potential to give a 19% return, in the upcoming 1 year. This is a large-cap stock with a market capitalization of around Rs. 259,407 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 3942
Target Price	Rs. 4700
Potential 1 year return	19.00%
52 week high share price	Rs. 5,900
52 week low share price	Rs. 3,186

The company's sales were up 94% YoY to Rs. 10038 crore, on tepid base, with a 3-year CAGR of 20%. Recovery in GM & apparel translated into gross margins improving materially by 320 bps YoY to 16.3%. Its EBITDA grew 350% YoY to Rs. 1008 crore. Driven by robust operational performance, it posted more than 6x jump in net profits to Rs. 642.9 crore.

Stock advantages, says ICICI direct

According to ICICI direct, "Results were a comprehensive beat on the profitability front driven by sustained improvement in product mix (GM & apparel). The company has been a consistent compounder with the stock price increasing at 35% CAGR in the last five years. D-Mart continues to remain India's most profitable low cost retailer, a strong play on India's retail growth story and a key beneficiary of the unorganised to organised segment shift. We anticipate store addition trajectory to accelerate and bake in 80 incremental store additions (addition of ~ 4.8 mn sq ft) in FY23-24E. Robust liquidity position and healthy operating cashflows to provide impetus to store addition pace. We model revenue, earnings CAGR of 32%, 48%, respectively, in FY22-24E."

Company profile:

Avenue Supermarts (ASL) operates supermarket chain under 'DMart' brand with core focus on value retailing. D-Mart, through its proven business model, has been able to maintain consistent profitability and remains an exceptional performer in its peer group. D-Mart has progressively improved its return ratios (RoIC: 20%+) despite being capital intensive (follows ownership model).

Disclaimer

The above stock was picked from the brokerage report of ICICI direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.