Avenue Supermarts nears record high; zooms 45% in 8 weeks

The stock was up 2% to Rs 1,649, trading close to its record high level of Rs 1,682 touched on August 2, 2018, on BSE in the intra-day trade.

Shares of Avenue Supermarts (ASL), which owns and operates D-Mart supermarket chain, were up 2% to Rs 1,649 a piece, trading close to its record high level of Rs 1,682 touched on August 2, 2018, on BSE.

In the past eight weeks, since October 23, the stock outperformed the market by surging 45% from Rs 1,136, as compared to a 7% rise in the S&P BSE Sensex.

Between August 1, and October 23, it fell 32% after the company reported a disappointing result for the second quarter of current fiscal on margin front. In comparison, the benchmark index was down 10% during the same period.

The company’s EBIDTA (Earnings before interest, depreciation, taxes and amortization) margin stood at 8.6% in six months ended on 30th September 2018 as against 8.7% in the similar period in the previous fiscal.

The rating agency CRISIL believes that ASL's credit risk profile will continue to benefit on account of improving the market position in the organised retail segment, strong annual cash generation, and the healthy financial flexibility.

The ramp-up in operations will be supported by the increase in new store rollout (25-30 stores per annum) and healthy growth of about 15% going forward. As a result, CRISIL expects ASL to maintain about annual growth of 20-25% growth going forward.

Currently, ASL's operations are largely concentrated in West and South India. Expected large cluster focused store addition over the next 3 years will benefit to diversify geographic reach of the company. CRISIL believes strong track record of outpacing its peers in growth, its strong merchandising and compelling value proposition, benefit of economies of scale will help to strengthen ASL's market share in organised food and grocery retail in India in the medium-term.

Further, the company has also initiated to ramp up its online strategy and a platform to support future sales channels. Improvement in geographic diversity along with sustenance of healthy operating performance will be key rating drivers in the medium term, CRISIL said while reaffirming its ratings on the bank facilities and debt instruments of ASL on October 26, 2018.

At 01:38 pm, Avenue Supermarts was trading 1.9% higher at Rs 1,645 on BSE, as compared to a 0.22% decline in the S&P BSE Sensex. A combined 469,082 equity shares changed hands on the counter on the BSE and NSE so far.