Avenue Supermarts, the parent of D-Mart, reported has reported a 47.45 percent jump in standalone net profit at Rs 96.66 crore for the fourth quarter ended March 31, 2017, over the weekend, but Kotak Institutional Equities maintained a sell rating with a 12-month target price of Rs 580, which translates into a downside of 28 percent from current levels.
The company reported strong 4QFY17 revenue growth of 41 percent on a YoY basis, led by likely sustained SSSG performance as well as new store additions. Total Revenue for FY17 stood at Rs 11,912 crore, as compared to Rs 8,595 crore during FY16.
Avenue Supermarts (ASL’s) EBITDA in FY17 stood at Rs 995 crore, up by 46.9 percent, as compared to Rs 677 crore during FY16. The company’s EBITDA margin improved from 7.9 percent in FY16 to 8.4 percent in FY17.
“EBITDA margins at 6.7 percent normalised sharply from 8.6 percent reported for 9MFY17 due to seasonal revenue mix variation in 4Q, but were flat on a year-on-year (YoY) basis,” Kotak Institutional Equities said in a report.
D-mart stock has had a stellar run post the IPO and is now trading at 49X FY2019E P/E which is expensive according to analysts tracking Avenue Supermarts in Kotak.
“The stock at CMP is trading at 49X FY2019E P/E, expensive in our view. We retain SELL with an unchanged DCF-based target price of Rs580,” it said.
“While we remain sanguine on the company’s growth prospects as well as the profitable business model, we believe current valuations are pricing in all positives,” said the report.
D-Mart follows everyday low cost - everyday low price (EDLC-EDLP) strategy which aims at using operational and distribution efficiency and thereby delivering value for money to customers by selling products at competitive prices.
It added 21 new stores in FY2017, similar to the additions in FY2016. Interestingly, six of these were opened in Rajasthan, NCR, Daman and Tamil Nadu, where D-mart did not have presence earlier.
“We believe the company is looking for new clusters where it could add new stores in the future and will continue to test waters in new areas. Maharashtra and Gujarat accounted for a lion’s share of 89 of the total 131 stores,” said the Kotak note.
Commenting on the financial performance of the company Neville Noronha, CEO and Managing Director, Avenue Supermarts, said, “March’17 quarter and financial year 2016-17 annual results has been in line with our expectations. Delivering great value and being consistently relevant to consumers is our most important long-term objective.”
For more information on stock market,equity tips,nifty please visit us at http://www.starindiaresearch.com/freetrail.php or call at 8817002233
The company reported strong 4QFY17 revenue growth of 41 percent on a YoY basis, led by likely sustained SSSG performance as well as new store additions. Total Revenue for FY17 stood at Rs 11,912 crore, as compared to Rs 8,595 crore during FY16.Avenue Supermarts (ASL’s) EBITDA in FY17 stood at Rs 995 crore, up by 46.9 percent, as compared to Rs 677 crore during FY16. The company’s EBITDA margin improved from 7.9 percent in FY16 to 8.4 percent in FY17.
“EBITDA margins at 6.7 percent normalised sharply from 8.6 percent reported for 9MFY17 due to seasonal revenue mix variation in 4Q, but were flat on a year-on-year (YoY) basis,” Kotak Institutional Equities said in a report.
D-mart stock has had a stellar run post the IPO and is now trading at 49X FY2019E P/E which is expensive according to analysts tracking Avenue Supermarts in Kotak.
“The stock at CMP is trading at 49X FY2019E P/E, expensive in our view. We retain SELL with an unchanged DCF-based target price of Rs580,” it said.
“While we remain sanguine on the company’s growth prospects as well as the profitable business model, we believe current valuations are pricing in all positives,” said the report.
D-Mart follows everyday low cost - everyday low price (EDLC-EDLP) strategy which aims at using operational and distribution efficiency and thereby delivering value for money to customers by selling products at competitive prices.
It added 21 new stores in FY2017, similar to the additions in FY2016. Interestingly, six of these were opened in Rajasthan, NCR, Daman and Tamil Nadu, where D-mart did not have presence earlier.
“We believe the company is looking for new clusters where it could add new stores in the future and will continue to test waters in new areas. Maharashtra and Gujarat accounted for a lion’s share of 89 of the total 131 stores,” said the Kotak note.
Commenting on the financial performance of the company Neville Noronha, CEO and Managing Director, Avenue Supermarts, said, “March’17 quarter and financial year 2016-17 annual results has been in line with our expectations. Delivering great value and being consistently relevant to consumers is our most important long-term objective.”
For more information on stock market,equity tips,nifty please visit us at http://www.starindiaresearch.com/freetrail.php or call at 8817002233
No comments:
Post a Comment