Mumbai: Avenue Supermarts Ltd., which owns and operates retail chain D-Mart, hit ₹3 trillion in market capitalization on Monday, the 17th Indian listed company to do so. The company’s shares have risen more than 70 per cent so far this year.
Stock hits record high ₹4,837 shares on BSE today, increasing market capitalization ₹3.11 trillion. The stock traded at 0251 pm ₹4809, up 9.1% from the previous close.
Avenue Supermarts now joins the league of Reliance Industries Limited, Tata Consultancy Services, HDFC Bank, Infosys, Hindustan Unilever, HDFC Limited, ICICI Bank, Bajaj Finance, ITC, Kotak Mahindra Bank, Bharti Airtel, State Bank of India, ONGC, Wipro Is. Ltd., HCL Technologies and Asian Paints, which have achieved this feat.
The company reported a 46% year-on-year growth in its standalone revenue for the second quarter ₹7,649.64 crore. According to a Goldman Sachs report, growth was 5 percent ahead of its estimate.
“We believe revenue growth was driven by strong footfall recovery due to the easing of lockdown restrictions during the quarter,” the Goldman Sachs report said. The brokerage firm maintains its buy rating on the stock, and has raised the target price. ₹to 4,539 ₹4,239.
Its store count increased from 238 a quarter ago to 246 in the September quarter. The brokerage firm expects to add 10 and 13 more outlets in Q3 and Q4 respectively.
“Given the run-up of the stock over the past one year, the key questions for investors are whether the valuation (106x FY23e PE) is ahead of the fundamentals and whether there is a risk of de-rating. In our view, we are still in the midst of an evolving high-growth compounding manufacturing; Investors should remain positive on DMart.” The brokerage firm has raised its target price on the stock by up to 30% ₹5,500 per.
HSBC Global Research said that given the size of India’s grocery market, value retailers such as DMart could potentially have 10 times more stores than they currently do. This significant growth opportunity is likely to last for several decades.
DMart’s focused strategy of pricing as a competitive edge and driving profits through scale and pursuit of low cost makes it a formidable business model to capture this value for the long term. HSBC Global said disruptions due to the pandemic and DMart’s rapid recovery, despite the disruptions it faces, significantly enhance this outlook.
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