Radhakishan Damani's DMart says sales up 18% YoY in June quarter

Avenue Supermarts Ltd (DMart) on Monday said its standalone revenue grew 18.12 per cent year-on-year (YoY) to Rs 11,584.44 crore for the June quarter compared with Rs 9,806.89 crore in the same quarter. The Radhakishan Damani-led company reported revenue of Rs 5,031.75 crore in the June quarter of 2021 and Rs 3,833.23 crore in the June quarter of 2020. In a brief BSE filing post market hours of Monday, DMart said the total number of stores stood at 327 as on June 30.

The stock settled the day at Rs 3,865.35, down 0.63 per cent.

In a note last month, brokerage Motilal Oswal Securities said DMart’s remarkable consistency in achieving industry-leading growth, margins and return on capital employed (ROCE) despite having a relatively asset-heavy model warrants rich valuations.

In the last five years, DMart traded at 60 times EV/Ebitda and 99 times PE. After a 25 per cent correction since September, DMART was trading at 36 times EV/Ebitda and 58 times PE on FY25E, which represented a 30 per cent  discount to historical multiples. This is mainly attributed to weak same store sale growth (SSSG) in the recent past.

"We believe that concerns about a growing online grocery market are unwarranted, as the share of both online and modern retail is miniscule in the total grocery market, and the market opportunity is huge. We believe SSSG improvements in FY24 should boost valuation multiples. We value DMART at 40 times FY25E EV/Ebitda and an implied P/E of 64 times on June 2025 to arrive at a target of Rs 4,200," it said.

For the March quarter, DMart reported a 21 per cent jump in revenue at Rs 10,337 crore against Rs 8,606.09 crore in the year-ago quarter. Its net profit rose 8 per cent to Rs 505.21 crore comapred with Rs 466.35 crore in the same period previous year.