North India Statesman
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Avenue Supermarts (DMart) shares fell nearly 6% on Monday morning. Investors were disappointed due to the quarterly results not performing as expected. Shares of DMart opened at Rs 3520 on BSE and after some time fell to Rs 3640.35 with a fall of 5.74%. This performance is close to the 52 week low of the stock (Rs 3400).
December quarter: profit and performance
Net Profit:
- The company’s net profit in the December quarter stood at Rs 724 crore.
- It was Rs 690 crore in the same period of the last financial year.
- Profit After Tax (PAT) Margin:
- Current quarter: 4.5%
- Same quarter of last financial year: 5.1%
Revenue:
- Rs 15973 crore (December quarter 2023).
- It was Rs 13,572 crore in the last financial year quarter.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization):
- Current quarter: Rs 1217 crore.
- Same quarter of last financial year: Rs 1120 crore.
Brokerage house reduced target price
Based on the quarterly results, major brokerage firms have revised the target price of DMart.
Nuvama Institutional Equity:
- New target price: Rs 4212.
- First target price: Rs 5040.
- Rating: Hold.
Motilal Oswal:
- New target price: Rs 4450.
- First target price: Rs 4750.
- Rating: Bye.
stock market reaction
- DMart’s weak profit margins and lower-than-expected revenue growth disappointed the market.
- Stock market experts say that the company’s margin pressure and expensive valuations are challenging its performance.
What is the message for investors?
- Reconsidering the investment:
- Brokerage houses have reduced target prices, but some have maintained ‘buy’ ratings.
- Long Term Perspective:
- DMart’s strong brand image and consumer demand may make it attractive for long-term investment.
- Short Term Risk:
- Profit margins and high valuations may pose a risk to investors in the short term.
