Shares of Avenue Supermarts jumped 18 per cent to hit an all-time high of Rs 5,599 on the Bombay Stock Exchange (BSE) on the back of strong earnings and growth expectations.
The stock crossed the Rs 5,000 mark for the first time and the market cap of the firm rose to Rs 3,31,825 crore. The company has also entered the list of top 15 most valued companies by market capitalisation.
The large-cap stock has been gaining for the last 5 days and has risen 21.42 per cent during the same period. It has gained 159 per cent in one year and risen 85 per cent since the beginning of this year.
Recently, the company reported a 46.6 per cent increase in its standalone revenue from operations at Rs 7,649.64 crore in Q2 FY22. Revenue from operations in the year-ago period stood at Rs 5,949 crore.
"The company has guided for a 47 per cent YoY/52% QoQ growth in revenues aided by the easing of restrictions, normalized store timings and recovery in demand for general merchandise," Systematix Institutional Equities stated in a research report.
"We expect gross margins to improve led by better general merchandise sales, while positive operating leverage should lead to EBITDA margin expansion of 273 bps YoY," it added.
ICICI Direct believes that the easing of Covid-19-related restrictions and an uptick in demand are expected to result in swift profitability recovery for Avenue Supermarts (D-Mart) in Q2FY22.
"We expect gross margins to dip marginally by 50 bps YoY to 14.0% (up 90 bps QoQ) owing to inflationary pressure. On account of positive operating leverage, we expect EBITDA margin expansion of 120 bps YoY (310 bps QoQ) to 7.4%. On a favourable base, we anticipate PAT growth of 83% YoY to Rs 363.9 crore," the brokerage house said in its report.
According to a report by Motilal Oswal, the retail industry was one of the most impacted during the Covid-19-led nationwide lockdown. With the opening up of the economy, along with the upcoming festive season, more than 95 per cent of stores are now operating at full capacity, with no time restrictions.
The brokerage house noted that the retail operations and sales recovery have been broad-based unlike the first Covid-19 wave, which saw Tier II/III cities in a much better position vis-a-vis urban areas.
The meeting of the board of directors is scheduled to be held on October 16, 2021, to consider and approve the un-audited standalone and consolidated financial results of the company for the quarter and the half-year ended on September 30, 2021.
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