Technofunda Analysis of Avenue Supermarts Limited
(DMart)
19 Key Points Analysis of DMART After Q3FY25 Results and Price Target
This detailed analysis of Avenue Supermarts Limited
(DMart) highlights its performance from both fundamental and technical
perspectives, providing insights into its current market positioning and growth
areas.
Short Summart of Q3FY25 Results
YOY (Year-over-Year) Analysis:
- Sales: ₹15,973 crore (↑18% from ₹13,572 crore in Dec 2023)
- EBIDT: ₹1,217 crore (↑9% from ₹1,120 crore in Dec 2023)
- Net Profit: ₹724 crore (↑5% from ₹690 crore in Dec 2023)
- EPS (Earnings Per Share): ₹11.12 (↑5% from ₹10.61 in Dec 2023)
QOQ (Quarter-on-Quarter) Analysis:
- Sales: ₹15,973 crore (↑11% from ₹14,444 crore in Sep 2024)
- EBIDT: ₹1,217 crore (↑11% from ₹1,094 crore in Sep 2024)
- Net Profit: ₹724 crore (↑10% from ₹659 crore in Sep 2024)
- EPS: ₹11.12 (↑10% from ₹10.14 in Sep 2024)
Summary:
- Strong YOY growth in Sales (+18%), reflecting robust business performance.
- Moderate YOY growth in Net Profit and EPS (+5%), potentially indicating some cost pressures or higher expenses.
- Healthy QOQ growth in all metrics, showcasing consistent performance momentum into Q3 FY25.
Fundamental Analysis of DMART's Share/Avenue Supermarts share
1. Promoters Background and Record
DMart is a well-established national supermarket chain known for value retailing across various product categories like Foods, FMCG, and General Merchandise & Apparel.
2. Sector Analysis
The retail chain sector is currently on a growth
trajectory, with increased consumer spending and modernization driving
expansion. Only concern for this sector is high inflation.
3. Shareholding Pattern
Despite DIIs reducing their stakes, FIIs have been
consistently increasing their holdings since September 2023, signalling foreign
investor confidence.
4. Cash Efficiency
Positive operating cash flow highlights efficient
management of working capital and profitability.
5. Inventory Turnover Ratio (ITR)
An ITR of 33 and a healthy cash conversion cycle
underscore efficient inventory management.
6. Debt Service Coverage Ratio
With negligible debt and a strong interest coverage
ratio, DMart showcases robust financial health.
7. Operating Profit Margin (OPM)
At 7.82%, OPM is lower compared to peers,
indicating potential areas for margin improvement.
8. Price Earnings Ratio (P/E)
Stock P/E: 88.2
Industry P/E: 55.7
DMart’s higher P/E suggests a premium valuation,
reflecting strong growth expectations.
9. Return on Capital Employed (ROCE) & Return
on Equity (ROE)
ROCE: 19.4%
ROE: 14.5%
These figures indicate effective utilization of
resources and reasonable returns to shareholders.
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10. Sales and Profit Growth
Last 3 Years: Sales growth of 28% and profit growth
of 32%.
Last 12 Months: Sales growth of 18% and profit
growth of 12%.
Latest Quarter: Sales growth of 8% and profit
growth of 7%.
While growth remains healthy, the latest quarterly
figures indicate a slight slowdown.
11. Market Share
DMart faces stiff competition from Reliance Retail
and Trent but maintains a strong foothold in southern and western India.
12. Store Expansion
The company has aggressively expanded its
footprint, now operating 387 stores across India.
13. Dividends and Share Buybacks
DMart does not currently pay dividends, emphasizing
reinvestment into growth and expansion.
14. Company’s Concall
Regular concalls provide transparency and are
accessible via platforms like Screener.
Technical Analysis of DMART's Share/Avenue Supermarts share
1. EMA (5 and 21)
A continuing negative crossover, with the 5 EMA at
₹3,750 and the 21 EMA at ₹4,085 (weekly basis), signals short-term bearishness.
2. DMA (50 and 200)
50 DMA: ₹3,829
200 DMA: ₹4,234
The stock is trading below both averages,
indicating potential downward pressure.
3. Relative Strength Index (RSI)
RSI at 40 reflects weak momentum, hovering near the
oversold zone.
4. Super Trend
The super trend indicator shows negative signals,
suggesting caution in the current trend.
5. Trend Line
The stock’s trend remains negative, with bearish
sentiment prevailing.
Final Conclusion
DMart’s strong fundamentals, including steady sales
and profit growth, a robust financial position, and aggressive store expansion,
position it as a significant player in India’s retail market.
However, rising competition & inflation and
technical indicators signalling short-term bearishness warrant careful
monitoring. Investors should consider the company’s long-term growth potential
alongside current challenges before making investment decisions.
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