The owner of DMart outlets, Avenue Supermarts, saw a minor decrease in share price after its Q1 FY25 business update was made public. The stock dropped more than 1% on Wednesday, closing at ₹4,700.00 a share on the BSE, in spite of a strong increase in revenue.
Key Highlights of Q1 FY25 Business Update
For the first quarter of FY25, Avenue Supermarts reported provisional standalone revenue from operations of ₹13,711.87 crore, an 18.3% YoY growth from ₹11,584.44 crore in the same period the previous year. The corporation operated 371 outlets as of June 30, 2024, and added seven new locations in the same quarter.
Performance Metrics
- Revenue Per Store: Increased by 5% YoY to ₹149 crore.
- Revenue Per Square Foot: Rose by 4% YoY to ₹35,935.
- Revenue Gap: The gap between revenue per store and revenue per square foot narrowed to approximately 1%, indicating improved efficiency.
Motilal Oswal, a brokerage business, states that “Over the last 4-5 quarters, revenue per square foot has been growing steadily, with YoY growth rates of 4-6% each quarter.” This pattern represents a turnabout from the previous three years, when the development of large-size stores and low discretionary spending kept revenue per square foot low.”
Market Reactions and Analyst Insights
Foreign brokerage Citi cautioned about the stock’s growth prospects and value despite the strong sales increase. Citi raised concerns about how product mix and shop expansions might affect revenue per square foot. The share price target for Avenue Supermarts is ₹3,400. The brokerage has assigned a ‘Sell’ recommendation to the company. “DMart’s Q1 business update shows no sign of growth acceleration,” stated Citigroup.
On the other hand, Motilal Oswal kept a “Neutral” rating with a share target price of ₹5,310. Although the brokerage recognised the upward trend in revenue growth, it advised caution in light of the state of the market.
Stock Performance
The shares of Avenue Supermarts have increased by more than 10% during the last month and by more than 17% year-to-date (YTD). The stock was trading marginally down at ₹4,774.00 a share as of 10:47 AM on the BSE.
Broader Market Context
The share price of Avenue Supermarts has recently fluctuated, which is a result of wider market movements driven by a number of variables such as economic statistics and investor mood. It is recommended that investors closely monitor the company’s performance and the state of the market.
Final Thoughts
The Q1 FY25 business report from Avenue Supermarts highlights its robust sales growth and growing store network. On the stock’s future success, market analysts are still split, with some warning against taking on too many obstacles. Before making an investment, investors should think about these insights and speak with licenced professionals.
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