Radhakishan Damani Stock: DMart shares drop 6% as retail chain's Q3 results fail to excite Street

Radhakishan Damani stock: The stock of Avenue Supermarts -- which owns and operates DMart stores -- cracked as much as six per cent on Monday after the company reported its financial results for the October-December period. On BSE, DMart shares fell by as much as Rs 235.2 to Rs 3,627 apiece, having begun the day at Rs 3,699. 

Ace investor Radhakishan Damani-owned DMart reported a 6.7 per cent rise in consolidated net profit to Rs 589.6 crore for the quarter ended December 2022 on a year-on-year basis. The retail chain company’s revenue grew 25.5 per cent on year to Rs 11,569.1 crore for the quarter.

Also Read: DMart Q3FY23 Results: Retail chain’s profit up 9.4% to Rs 641 cr, sales up over 25% - check details

Brokerages held mixed views on DMart. 

Centrum Broking maintained a 'buy' rating on the stock with a target price of Rs 5,054 apiece -- implying upside potential of 30.9 per cent from its closing price on Friday. 

“We remain attracted by DMart’s sharp execution skills and large opportunity size. The organised grocery retail industry penetration is at 4‐5 per cent in India giving enough headroom for the company to grow," said Akhil Parek, Research Analyst at Centrum Broking.  

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The brokerage values the stock at 85 times its estimated earnings for the March-September 2024 period.

Nuvama Research recommended a 'hold’ on the stock with a target price of Rs 4,193 apiece.

“Avenue Supermarts (DMart) posted a weak Q3FY23 performance on revenue growth and recovery, which still remains lower than pre-COVID, besides, the store addition is also muted in Q3, however, expects it to recover eventually," Nuvama said in a research report. 

Also Watch: BULL Vs BEAR: DMart - Buy Or Sell, Watch To Know The Triggers In Focus?

The brokerage lowered its target from an EV-to-EBITDA multiple of 55 times from 60 times on lower growth estimates.

In the last one year, the DMart stock has corrected almost 16 per cent, and around six per cent in the last six months.