Avenue Supermart gave whopping 442% returns; D-Mart promoter set to make investors richer still

It was just an year ago that D-Mart promoter Avenue Supermart (ASL) entered stock exchanges. Since the time of listing, the company was meant to create history, considering it was the first IPO in over 12 years to clock over 100% premium on listing. ASL opened gates for IPO market. And it was not just primary market either, ASL made history again as today the company showed how big its plans are when it comes to market valuation and trading. On Monday, D-Mart, joined the prestigious club of companies with Rs 1 lakh crore market capitalization. ASL touched a fresh high of Rs 1,619.95 per piece on BSE rallying over 2% on the index. 

Rs 1 lakh crore market capitalization and that also in just 1 year's time is very commendable and positive for growth in Avenue Supermart going ahead. 

On BSE, ASL competes with 12 retail channels, and guess what! Together the peers are not even close to what ASL has achieved today. These peers have been on exchanges way before it could come, and has failed to outperform the way ASL has did. 

Peers like VMart have market valuation of Rs 4,313.96 crore, Future Retail of Rs 28,642.72 crore, Aditya Birla Fashion of Rs 10,831.05 crore, Trent of Rs 10,664.04 crore, Bata India of Rs 9,940.96 crore, Future Lifestyle of Rs 8,738.21 crore and Shoppers Stop of Rs 5,025.98 crore. 

Other rivals like V2 Retail, Mandhana Retail, Archies Ltd, Future Enterprises and SORIL Infra Resources had market cap of Rs 1,408.79 crore, Rs 166.17 crore, Rs 106.74 crore, Rs 1,902.80 crore and Rs 797.92 crore today respectively. 

Furthermore, today ASL has given a return of 106.91% in one year if  compared with 52-week low of Rs 782.9 per piece which was witnessed on June 06, 2017. 

But did you know ASL has given nearly 442% return as against IPO issue price of Rs 299 per piece which came in March 2017. 

Reason for such massive rise in ASL is not yet clear. Today, Avenue Supermarts informed stock exchanges that their trading window for dealing in company would be closed from  June, 2018 until 2 trading days after the public announcement of, inter-alia, the financial results of the Company for the quarter ending on so" June, 2018. 

Last month, promoter Radhakishan Damani sold 1% of the total paid up equity share capital of ASL aggregating to 6,240,844 shares. The company also revealed that Damani proposes to divest part of his shareholding in the Avenue Supermarts.

Damani became India’s new retail king after the launch of his supermarket chain D-Mart aka Avenue Supermarts (ASL) in March 2017. Forbes describe Damani as 151th Billionaires globally with networth of $10 billion and also he is 12th richest man in India. 

Avenue Supermarts still has a long way to go, as analysts are upbeat on its business model. 

According to JM Financials, the attractiveness of D-Mart’s operating model stems from the significantly higher level of throughput that its stores generate - nearly 2-3x what other retailers clock on an average, which helps justify its choice of owning the stores (including the cost of land on which they are built), and the discounts (‘Every Day Low Price’ instead of festivals or seasons related limited period discounts) that it pampers its shoppers with – the latter being one of the key drivers of footfalls and conversions for D-Mart, in our view. 

Richard Liu and Vicky Punjabi analysts JM Financials said, “Our framework for analysing the potential for F&G retail in India suggests that there could be opportunity for 1,500 large-format F&G stores in India; as such, there is a long runway for store growth in the country and DMart’s impeccable store-economics model makes it bestplaced to take advantage of this opportunity, in our view. DMart’s network currently comprises 141 stores only (Dec’17).” 

The duo added, “We forecast 27%, 29% and 35% revenue, EBITDA and net profit CAGR, respectively, over FY17-22E and value the stock at INR 1,675 per share (DCF-based). Near-term valuation multiples are undoubtedly rich (46x one-year forward EV-EBITDA, 78x PE) but then, a cashflow-backed earning compounder rarely fails on delivery.”