Dmart stock up by 15% : Here is why

Avenue Supermarts, the parent company of DMart, recently released its Q3 FY25 business update, which has garnered mixed reactions from brokerages. Here’s a summary:

Financial Performance:

• Revenue: Avenue Supermarts reported a standalone revenue of ₹15,565 crore, marking a 17.5% year-on-year growth. This was slightly above analysts’ expectations.
• Net Profit: The company’s net profit rose by 5.8% to ₹659 crore compared to the same period last year.
• Sales Growth: Sequentially, sales grew by 11%. The company added 10 new stores during the quarter, bringing the total count to 387 stores.

Analyst Opinions:

• Positive Views: Some brokerages like CLSA have maintained an ‘Outperform’ rating with a price target of ₹5,360 per share, indicating a potential upside of 48%. They praised the company’s strong operational execution and growth in private labels.
• Negative Views: Other brokerages like Morgan Stanley have an ‘Underweight’ recommendation with a price target of ₹3,702 per share. They cited weak growth trends and competitive headwinds from quick commerce as concerns.
• Mixed Ratings: Out of 29 analysts covering the stock, 11 have a ‘Sell’ rating, 9 have a ‘Buy’ rating, and 9 have a ‘Hold’ rating.Market Reaction:
  • Share Price: Following the Q3 update, Avenue Supermarts’ share price surged by 10% in early trading. The stock closed at ₹3,972.20 on the day of the announcement.

  Overall, Avenue Supermarts’ Q3 performance shows strong revenue growth and operational efficiency, but analysts remain divided on the stock’s future prospects due to varying growth expectations and competitive pressures.