Shares of Radhakishan Damani led-DMart (listed as Avenue Supermarts) rose for the sixth straight session, touching a fresh 52 week high in early deals today. The retail stock, which hit a record high of Rs 5,899.90 on October 18, 2021 has gained 13.34% in the last six sessions. The rally in the stock can be majorly attributed to international brokerage firm CLSA initiating coverage on the stock with a target of Rs 5,107 last week. It assigned a buy rating to the DMart shares.
The target price of Rs 5,107 per share, amounted to a 26 percent rise from the stock's closing price of Rs 4,050 on March 20.
The brokerage firm highlighted an addressable market exceeding Rs 50,000 crore, with less than 5 percent organised. CLSA said that private labels could drive the next phase of share gains.
CLSA expects a threefold rise in D-Mart stores by FY34 as the company aims to expand its footprint across existing and new states.
D-Mart's competitive consumer prices stem from its efficient operating model, the brokerage added.
Aditya Gaggar Director of Progressive Shares said, “An Ascending triangle formation breakout was spotted in the stock which was confirmed with a trendline breakout in RSI and an upsurge in volume as well. Trend following indicator MACD confirms price activity by giving a positive crossover, ADX further confirms the move with a reading of 26 which indicates the presence of a strong trend. As per the pattern, the target is Rs 4,880. We had already initiated a technical report on the stock on 1st December 2023 at Rs 3,950 with a decline up to Rs 3,860 for the target price of Rs 4,885 and Rs 5,820.”
Abhijeet from Tips2trades said, "DMart is bullish and overbought on the Daily charts with next resistance at Rs 4574. Investors should book profits at current levels as a daily close below the support of Rs 4377 could lead to Rs 4060 in the near term."
Meanwhile, the stock was trading 4.25% higher at Rs 4477.25 against the previous close of Rs 4294.75 on BSE.
DMart shares have gained 33.25 per cent in a year and risen 10 per cent since the beginning of this year.
Total 0.34 lakh shares of the firm changed hands amounting to a turnover of Rs 15.07 crore on Tuesday. Market cap of the firm climbed to Rs 2.91 lakh crore. The share hit a 52-week low of Rs 3300.30 on March 28, 2023.
The stock has a one-year beta of 0.6, indicating low volatility during the period.
In terms of technicals, the relative strength index (RSI) of DMart stock stands at 76.2, signaling the stock is trading in overbought zone. Avenue Supermarts shares are trading higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
The PE ratio of DMart stands at 119.63 signaling the stock is overvalued compared to its industry. The PE of the retail industry stands at 106.78.