Damani Stock engaged in operating India’s largest supermarket chain, with focus on value-retailing, slumps upto 10 percent in the day’s trade following mixed Q2FY25 results and brokerage downgrades to underweight.
Price Action
With a market capitalization of Rs. 2,74,544 Crores, the shares of Avenue Supermarts Limited were trading at Rs. 4,219 per equity share, down 8 percent from its previous day’s closer price of Rs. 4,572.35.
Q2FY25 Results
Its Revenue from operations grew by 15 percent YoY from Rs. 12,624.37 Crores in Q2FY24 to Rs. 14,444.5 Crores in Q2FY25 and it grew by 3 percent QoQ from Rs. 14,069.14 Crores in Q1FY25 to Rs. 14,444.5 Crores in Q2FY25.
Its Net Profit grew by 6 percent YoY from Rs. 623.35 Crores in Q2FY24 to Rs. 659.44 Crores in Q2FY25 and it declined by 15 percent QoQ from Rs. 773.68 Crores in Q1FY25 to Rs. 659.44 Crores in Q2FY25. Its Net Profit Margin decreased from 4.92 percent in Q2FY24 to 9.69 percent in Q2FY25.
Brokerage Views
Morgan Stanley has also downgraded Avenue Supermarts shares to ‘Underweight’, reducing its target price to Rs. 3,702 per share. According to the brokerage, the management commentary casts doubt on the projected 20 percent top-line growth for the business, which could lead to further de-rating.
In addition, JP Morgan downgraded Avenue Supermart shares from its earlier rating of Overweight to Neutral by slashing its target to Rs. 4,700 from Rs. 5,400. It said that the firm’s second-quarter performance fell short of expectations, with revenue growth slowing due to weaker like-for-like (LFL) sales.
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The extent of the slowdown in same-store sales growth (SSSG) was unexpected, as a result, JPMorgan revised its same-store sales growth (SSSG) and revenue forecasts down by 4-6 percent for FY25-26.
Meanwhile, another brokerage, Bernstein, has maintained an ‘Outperform’ rating on Avenue Supermarts Limited with a target price of Rs. 5,800 per share.
While revenue growth was the biggest miss, marking the slowest in four years, and like-for-like (LFL) growth was the slowest in three years, standalone EBITDA and margins were only slightly lower year-on-year due to operating leverage.
It believes the firm can return to over 20 percent growth through faster store and retail area expansion, with increased focus on 4-6 hour delivery, and reduced competition from quick commerce in metros, with a time frame of 3-5 quarters for these factors to have an impact.
About the Company
Avenue Supermarts Limited is a national supermarket chain that focuses on value-retailing. It offers a wide range of products, with a focus on the Food, Non-Food (FMCG), General Merchandise, and apparel product categories.
Avenue Supermarts Limited has a pan-India Presence with over 377 stores as of Q2FY25. Coming to the revenue breakup of Avenue Supermarts Limited as of H1FY24, it generated 56.40 percent of its revenue from Foods, Non-Foods like personal care, other over-the-counter products 20.15 percent, and General merchandise & apparel 23.45 percent.
Ace Investor
As of Q2FY25, Radhakishan Shivkishan Damani the promoter of Avenue Supermarts Limited holds a 23.03 percent stake in the company, consisting of 14.98 Crore equity shares.
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Written by: Bharath K.S
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