Radhakishan Damani, other DMart promoters lose Rs 20,800 crore within minutes as stock plunges 9%

Radhakishan Damani and other promoters of Avenue Supermarts Ltd (DMart), who together owned 74.65 per cent stake in the retailer, took a Rs 20,800 crore dent in their pockets notionally, as the stock plunged over 9 per cent in Monday's trade following a muted set of Q2 results.

Concerns over competition from the online grocery format weighed, as DMart shares plunged 9.37 per cent to hit a low of Rs 4,143.60. At day's low, DMart promoters including the Damani family owned Rs 2,01,284 crore worth DMart shares against Rs 2,22,112 crore on Friday, down Rs 20,827 crore.

Analysts said DMart's sales were impacted by increasing competition from the online grocery format, especially quick commerce, in metro cities. They cut their earnings projections for FY25 and FY26 and suggested either Hold or Buy on the stock, saying the scrip now trades 10 per cent below its long-term average.

ICICI Securities said Q2 revenue revenue growth at 14 per cent YoY was lowest in a quarter ever. It said like-for-like (LFL) growth came in at 5.5 per cent against high-single digits earlier. Footfalls (bill cuts) declined 1 per cent sequentially against a 4 per cent QoQ growth in the base quarter.

"Revenue throughput per store was flat YoY. Retail expansion rate (14% YoY) was stable. Ebitda margin was down 30 bps due to operating deleverage despite better gross margin (mix-led). Overlap of consumers seeking convenience and shopping at DMART (value) appears to be higher than expected which should continue to impact its growth trajectory," it said.

The brokerage downgraded the DMart stock to 'Reduce' from 'Add' with a revised target price of Rs 4,100.

Prabhudas Lilladher said it would keenly watch out for sales trends in festival season. The brokearge suggested a 'Hold' with a DCF-based target price of Rs 4,748 against Rs 5,168 earlier.

Centrum Broking said a subdued discretionary spending and competitive pressure led to the muted Q2 results. The brokerage tweaked its earnings estimates but said it has upgraded the stock to 'Buy' after the recent price correction and suggested a revised target price of Rs 5,655. The stock is down 11 per cent in the past one month.

"DMart's LFL growth has been recently impacted by a moderation in inflation and a fast ramp-up of quick commerce services. We would watch out for impact of quick commerce on DMart LFL growth and the ramp-up in DMart Ready over the next few quarters. We lower our FY25/FY26 revenue estimates by 2 per cent/4 per cent as weaker store productivity partly offsets higher store additions," MOFSL said.

MOFSL said DMart’s revenue growth remains dependent on its ability to add store area. With the increase in capex, it believes store additions can pick up pace starting H2FY25. It factoring in 40 store addition in FY25, 45 in FY26 and 50 in FY27.