Avenue Supermarts dips 3% on profit booking post Q4 business update

The stock had gained up to 11 per cent in the last five straight trading sessions.

Shares of Avenue Supermarts, which operates retail chain DMart, dipped 3 per cent to Rs 3,535 on the BSE in Thursday’s intra-day trade after the firm reported 20 per cent year-on-year (YoY) growth in standalone revenue from operations to Rs 10,337 crore for the quarter ended March (Q4FY23). In comparison, the S&P BSE Sensex was down 0.12 per cent at 59,619 at 09:44 AM.

Meanwhile, the stock had gained for the five straight days and rallied 11 per cent during the period till Wednesday.

The company’s store addition during the quarter was robust as the company added 18 new stores in Q4FY23 (FY23: 40) taking the total store count to 324.

Motialal Oswal Financial Services said the revenue growth was largely driven by area additions of around 17 per cent YoY, while store growth stood at 14 per cent YoY. Store additions witnessed slower growth than area additions primarily due to larger store sizes of the newly opened stores.

DMart has seen a strong 73 per cent area addition over FY20-23 (20 per cent CAGR) and a standalone revenue growth of 74 per cent. The moderate revenue growth could mainly be attributed to the addition of bigger stores in the last couple of years (14 per cent increase in average store size) and underperformance within the non-food segment, the brokerage firm said with a ‘neutral’ rating on the stock.

Healthy store openings did not translate into higher sales as revenue per sq ft was at Rs 7,600, which is around 8-10 per cent below pre-Covid levels. The company, over the last four to five quarters has maintained its growth trajectory of 19-20 per cent but the same has been mainly a function of new store additions and weak SSSG. Gross margin enhancement would be a critical factor to watch as its non FMCG portfolio continues to be under stress, ICICI Securities said in a note.