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Avenue Supermarts slips 9% after a disappointing Q3 result

Avenue Supermarts, which owns and operates D-Mart supermarket chain, fell 9 per cent to Rs 1,423 on the BSE after the reported a disappointing set of numbers for December quarter.

SI Reporter  |  Mumbai 

DMart, avenue supermart, IPO, MSCI

Shares of Avenue Supermarts, which owns and operates supermarket chain, fell 9 per cent to Rs 1,423 apiece on the in early morning trade after it reported a disappointing set of numbers for the quarter ended December 31, 2018 (Q3FY19).

The company has posted 2.1 per cent year-on-year (YoY) growth in at Rs 257 crore. It had a profit of Rs 252 crore in the same quarter last fiscal. The growth during the quarter under review was slowest in eight quarters.

(earnings before interest, tax, depreciation and amortization) margin declined 200 bps to 8.3 per cent in Q3FY19 from 10.3 per cent in Q3FY18.

The company said its during the quarter under review was flat, primarily due to gross margin reduction on account of price cuts.

"Operating costs inched upwards due to preloading of certain expenses primarily around capability building across infrastructure and people." the company said in its exchange filing.

Total revenue of Avenue Supermarts, one of the largest food & grocery retailers in India, grew 33.2 per cent at Rs 5,451 crore against Rs 4,094 crore in the corresponding quarter of previous fiscal.

Motilal Oswal Securities expects standalone revenue to grow 35 per cent YoY on back of strong SSSG (led by festive season uptick) and new store additions. The brokerage firm had expected 170 bps contractions in margin to 8.6 per cent.

However, analysts at Antique Stock Broking expect to be able to maintain gross margin between 14.5-15 per cent and margin between 8.5-9 per cent during FY19-21e.

“Therefore, on the back of consistent store addition (25 stores each year) and relatively stable margins we expect to grow EPS at 33 per cent CAGR during FY18-21e,” the brokerage firm said, maintaining BUY rating on the stock with a target price of Rs 1,817.

had outperformed the market by surging 34 per cent from its recent low of Rs 1,170 on October 24, 2018. In comparison, the Sensex was up 6 per cent during the period till Friday.

At 09:45 am, the stock was trading 8 per cent lower at Rs 1,442, against 0.43 per cent decline in the benchmark index. The trading volumes on the counter more than doubled with a combined 1.23 million equity shares changed hands on the and so far.

First Published: Mon, January 14 2019. 09:46 IST