Shares of Avenue Supermarts Ltd (DMart) climbed 12 per cent in Friday's trade after the company in a Q3 update said its standalone revenue from operations for the quarter grew 17.18 per cent year-on-year (YoY) to Rs 13,247.33 crore compared with Rs 11,304.58 crore in the same quarter last year.
Shares of DMart soared 12.33 per cent to hit a high of Rs 4,064.15 on BSE. Despite this, the stock is up a mere 5 per cent in the past one year. "After the relatively weaker Q2, the revenue growth recovered to the 17-20 per cent YoY range," MOFSL said. It said that the sales growth was driven by 13 per cent YoY store addition and likely high single digit same store sale growth. The brokerage suggested a 'Buy' and a target of Rs 5,300 on DMart, as it is building in a store addition of 18, which would bring total store additions to 40 in FY25.
DMart's standalone revenue in the December quarter of 2021 stood at Rs 9,065.02 crore. Damani and his family and other promoter entities held 74.65 per cent stake in DMart at the end of September quarter.
Avenue Supermarts said its total number of stores as of December 31, 2024, stood at 387. CLSA has reportedly suggested an 'Outperform' rating on Avenue Supermarts, saying standalone revenue was 2 per cent above its estimates.
There has been concerns over rising competition in the industry. IIFL Securities last month noted that Flipkart Minutes has entered the quick commerce space with pricing similar to Flipkart, and also cited Amazon Tez's entry.
These players are providing home delivery at prices marginally below DMart. Moreover, Zepto has launched “Super Saver” for orders above Rs 900. All these three options provide home delivery at prices 2-3 per cent below DMart. While these will probably compete with other QC players, it seems unlikely that DMart will remain unscathed, the brokerage noted last month.
Dmart's Q3 numbers boosted investor sentiment.
"Contrary to common perception, DMart is no longer the go-to destination for the most affordable daily groceries. Our recent price survey revealed a surprising shift: Flipkart is offering grocery products at a 3.4 per cent discount to DMart, while Zepto, through its Super Saver programme, and Flipkart’s QC venture Minutes now offer prices 2 per cent lower than those at DMart Ready," IIFL said last month.
"Even Amazon Fresh is pricing groceries at levels comparable to DMart, signalling that the once- unquestioned dominance of DMart in terms of price advantage may be fading," it said.