Brokerages sceptical about Avenue Supermarts shares as it misses Q1 expectations – check target here

Despite strong first-quarter results, the majority of brokerage firms are sceptical about the Avenue Supermarts shares and have also reduced the share price of the company. The company, which owns a brand DMart reported a 132 per cent jump in profit in Q1 of the financial year 2021-22.

DMart on Saturday reported Rs 115 crore standalone net profit in the June-ended quarter of FY22, as compared to Rs 50 crore in the year-ago period. While its total revenue rose 31 per cent to Rs 5,032 crore in Q1 FY22 as against Rs 3,833 crore in June-ended quarter of FY21.

The scrip declined by 2 per cent to Rs 3311.7 per share on the BSE intraday trade today, which is also a day’s low level. At around 02:10 pm, the stock was trading over 1 per cent lower to Rs 3344.85 per share on the BSE as compared to a 0.03 per cent rise in the S&P BSE Sensex on Monday.

Jefferies has an Underperform rating on Avenue Supermarts, and downgrades target to Rs 2,300 per share. It mentions, surprised negatively with a 22-quarter low gross margin of 12.4 per cent, and store needs 45 days of unhindered operational time to get back to pre-covid levels.

Morgan Stanley downgrades Avenue Supermarts’ shares to an Equal-weight stance and says, it will await a better entry point due to lack of near-term triggers. The brokerage cut the target price to Rs 3268 per share as Q1 earnings missed our and consensus estimates.

Citi has a Sell call on Avenue Supermarts, and trims consensus estimates by another 8 per cent for a full year. It reduced the target to Rs 2210 per share as weak Q1 results lead to trimming of estimates.

On the other hand, Goldman Sachs maintains a Buy call on Avenue Supermarts, but lowers FY22 EPS estimates by 7.9 per cent to reflect a lower margin in Q1. It points out, margin impact to be one-off as a consequence of Covid restrictions. Raises price target to Rs 3690 per share.