Damani's DMart surges 18%, hits fresh record high; stock up 33% in a week

Shares of Avenue Supermarts crossed the Rs 5,000 mark for the first time

Shares of Avenue Supermarts, owner of DMart chain of retail stores, crossed the Rs 5,000 mark for the first time as they rallied 18 per cent to hit a new high of Rs 5,599 on the BSE in intra-day trade on Wednesday on expectations of strong earnings growth.

In the past one week, the stock has outperformed the market by surging 33 per cent, as the company reported strong revenue growth for the July-September quarter (Q2FY22) and added eight new stores. In comparison, the S&P BSE Sensex was up 2.6 per cent during the same period.

The board of directors of Avenue Supermarts is scheduled to meet on November 2, 2021, to consider and approve unaudited financial results of the company for the quarter and half year ended September 30, 2021.

On October 4, DMart said it has reported a 46.6 per cent increase in its standalone revenue from operations at Rs 7,650 crore in Q2FY22. In the pre-pandemic July-September quarter of FY 2019-20, it had a revenue of Rs 5,949 crore.

During inflationary times, hard-discount retailers are likely to do well as they are likely to attract more customers due to squeeze in personal disposable income, more commissions due to price hikes taken by fast-moving consumer goods (FMCG) companies, analysts at IDBI Capital said in a recent report.

"Given strong vaccination drive, we expect significant normalisation of mobility. Consequently, we expect discretionary categories to come back to normal levels. Retailers whose business relied on malls (apparel companies) are likely to bounce back strongly," the brokerage firm said.

Meanwhile, in the past three months, post-April-June quarter (Q1FY22) results, the stock of D-Mart has surged 66 per cent, as against a 15 per cent gain in the Sensex. In Q1FY22, the company had reported a 132 percent year-on-year (YoY) jump in standalone net profit at Rs 115 crore. Its profit stood at Rs 50 crore in the year-ago period. Earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved to 4.4 per cent in Q1FY22 as compared to a 2.8 per cent in Q1FY21.

Radhakishan Damani-owned DMart is a national supermarket chain, with a focus on value-retailing. The company offers a wide range of products with a focus on foods, non-foods (FMCG) and general merchandise & apparel product categories.