DMart's Q1 Results Meet Expectations, Brokerages Remain Optimistic

Avenue Supermarts, the parent company of DMart, reported its earnings for the first quarter of the current fiscal year, with net profit and revenue aligning with market expectations. Investors responded positively, as DMart shares rose over 2% in early trading on July 15.

As of 9:20 am IST, DMart share price were trading at ₹5,045.95 on the NSE, up by 2.1% from the previous session's close.

Despite the positive earnings report, brokerages largely maintained their ratings on Avenue Supermarts without significant changes.

Avenue Supermarts reported a consolidated net profit of ₹773.8 crore for Q1 FY24, marking a 17.5% increase from ₹658.8 crore in the same period last year. A Moneycontrol poll had predicted a net profit of ₹798 crore.

The company also recorded an 18.6% year-over-year rise in consolidated revenue from operations, reaching ₹14,069.1 crore compared to ₹11,865.4 crore a year ago. Preceding the results, the expectation was a 17.5% annual revenue increase to ₹13,938 crore.

The standout aspect of Avenue Supermarts' Q1 performance was the improvement in gross margins, driven by the General Merchandise & Apparel segment. However, rising costs, including increased investments in service level improvements and future capability building, offset the positive contribution from GM&A.

CLSA emphasized the importance of store additions and gross profit growth, maintaining its outperform rating with a target price of ₹5,535 per share.

JPMorgan reiterated its ‘overweight’ rating, citing DMart as the leading growth engine among discretionary names, with a price target of ₹5,400 per share.

Nuvama Institutional Equities kept its ‘hold’ call but noted a gradual increase in store productivity. Consequently, it raised the target price for Avenue Supermarts to ₹5,091 per share, up from ₹4,821.

Jefferies also retained its ‘hold’ rating, noting that while the product mix improved, expectations for the quarter were high due to new store openings. The brokerage set a target price of ₹4,600 per share.

DMart is a supermarket chain owned by Avenue Supermarts Ltd. that offers customers a wide range of products across categories like food, garments, home appliances at competitive prices under one roof. DMart now has over 168 stores across India and aims to provide customers with good products at great value. In addition to supermarkets, Avenue Supermarts Ltd. also owns brands like DMart, DMart Minimax, DMart Premia that operate under its ownership.