Radhakishan Damani’s Avenue Supermarts, the company that encompasses the DMart hypermarket chain, last week announced that its standalone revenue from operations was Rs 7,303 crore for the January-March quarter, up 18% on-year basis.
During the last quarter, Avenue Supermarts recapitulated to grow strongly. Its revenue from operations was 2% ahead of what interpreters at Global brokerage and research firm Goldman Sachs had predicted.
Radhakishan Damani’s Avenue Supermarts, the company that runs the DMart hypermarket chain, last week said that its standalone revenue from operations was Rs 7,303 crore for the January-March quarter, up 18% on-year basis. However, simultaneously with the positive business upgradation, the company also announced that with rising coronavirus cases its business will continue to be conditioned on how the pandemic marches. Currently, shares of the firm trade at Rs 2,830 apiece, descending from their March 2021 highs of Rs 3,286 per share.
The company has uttered a signal of discretion over the growing coronavirus cases. “Due to increased Covid-19 cases since March 2021, several restrictions have been put in place in certain cities and towns where we operate. The number of cities and stricter enforcements keep growing every day,” Avenue Supermarts stated in the update. The company demands the situation to endure the same at least till the ending period of April.
“Our business will continue to be reliant on how the pandemic trends further and the consequent restrictions for operating our stores,” they continued. The business has been operated owing to restrictions deviating from region to region, stores closing on certain days to sudden shutdowns for a consecutive week or more.
During the last quarter, Avenue Supermarts proceeded to grow vigorously. Its revenue from operations was 2% ahead of what analysts at Global brokerage and research firm Goldman Sachs had predicted. Further Avenue Supermarts added 13 more store locations during the quarter, which is again more than what analysts at Goldman Sachs had foretold. The brokerage firm said that the strong fourth-quarter revenue and store addition illustrates Avenue Supermarts ability to encourage consumer footfalls due to engaging price positioning correlated to other online and offline rivals. Further, they stated that the widening E-commerce reach of Avenue Supermarts also equals the loss of offline sales.
Avenue Supermarts told that stores older than 2 years saw 6% growth for the months of January-February 2021 correlated to the same period last year. The second wave of the coronavirus has also ventured to clamp down on the recovery. “These stores saw a negative growth of 9.4% for the first 15 days of March 2021 as compared to the first 15 days of March 2020,” they added. However, in the second half of March 2021, the figures reflected owing to a low base effect.
Although Goldman Sachs persists the confidence about the stock but the business update presented by Avenue Supermarts, has urged the brokerage firm to change its appraisals. Interpreters at Goldman Sachs wrote about their incorporation of higher January-March quarter revenues and the negative impact of the lockdown in the first quarter of FY22 in the model and changed our FY21E-29E EPS estimates by +1 to -11%. On our revisions, our 12-month target price goes to Rs 3,290 (from Rs 3,472; -5%). Due to COVID-19, unanticipated competition, sudden losses in online business and unforeseen disruptions have severely occurred.
