DMart stock heads south amid margin concerns; analysts cut rating

Over half the analysts now have a 'sell' rating as they feel valuation is too high

Even after posting good revenue growth in the September quarter, most analysts have reduced their rating on the stock of Avenue Supermarts.

The entity operates DMart, the food and grocery chain. The rating downgrade is due to profit margin concern. Analysts also feel earnings are not strong enough to justify the higher stock valuation — after Monday's fall of 5.5 per cent on the BSE, it is still nearly 63 times the estimated FY20 earnings.

The shares ended the day’s trade at Rs 1,333.15 and this fall eroded Rs 48.4 billion of the company's market capitalisation. So far this year, the shares