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Why Avenue Supermarts stock fell over 7% today even as firm clocked 18.1% rise in Q2 net profit

At 2:42 pm, the Avenue Supermarts stock was trading 4.91% or 69.25 points lower at 1,341 level on BSE. The stock which opened at 1,340 level fell to an intra day low of 1,310 on the BSE.

twitter-logo BusinessToday.In        Last Updated: October 15, 2018  | 15:28 IST
Why Avenue Supermarts stock fell over 7% today even as firm logged 18.1% rise in Q2 net profit

The Avenue Supermarts stock fell in trade today even as the firm reported a 18.1 per cent rise in its net profit to Rs 225.7 crore for the quarter ended September 30. However, the earnings came below expectations with brokerages cutting target price for the stock.

At 2:42 pm, the Avenue Supermarts stock was trading 4.91% or 69.25 points lower at 1,341 level on BSE.

The stock which opened at 1,340 level fell to an intra day low of 1,310 on the BSE. It closed at 1,410.75 level on Friday. The stock fell up to 7.14% in trade today erasing nearly Rs 6,000 crore in market capitalisation.

The stock opened at a loss of 5.02% in trade today. It touched an intra day low of 1,310, down 7.14%.

The large cap stock has gained 13.73% since the beginning of this year and has risen 8.73% during the last one year.

Avenue Supermarts, which runs the D-Mart supermarkets chain, reported a 18.1 per cent rise in its net profit to Rs 225.7 crore for the quarter ended September 30.

The Mumbai-based firm had reported a net profit of Rs 191.04 crore in the corresponding quarter a year ago.

It reported Rs 4,872.5 crore revenue from operations in Q2, up 38.9 per cent, compared with Rs 3,506.9 crore in the year-ago period.

Brokerage IIFL cut FY19/20/21 earnings per share (EPS) by 5% each to factor in 2Q miss and continued margin pressures as it said D-Mart's pricing aggression was driven by enhanced competitive pressures and likely to sustain going forward. The brokerage maintained reduce position on the stock with a target price of Rs 1,120

Jefferies also cut the target price on the stock to Rs 1,375 from Rs 1,470 citing revenue growth at 38.9%. Earnings before interest tax depreciation and amortisation and profit after tax growth came below expectations, the brokerage said. The brokerage cut EBITDA estimates of the firm by 3%.  

Credit Suisse said profit after tax came 10% below estimates. With main miss emanating from margin, the brokerage cut 2019/2020 expected earnings per share by 3%/5%.

Six of 15 brokerages covering the stock rate it 'buy' or higher, two hold and seven 'sell' or lower, according to the analyst recommendations tracked by Reuters.    

As on September 30, 2018, the company had 160 stores in Maharashtra, Gujarat, Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh, Rajasthan, NCR, Chhattisgarh and Punjab.

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