How much will lockdown impact Avenue Supermarts (DMart) operations? See detailed report here

The nationwide lockdown amid the Cornovirus pandemic has impacted all and sundry including retail stores, which have been working under restrictions. One such company which has been adversely impacted by the ongoing lockdown is Avenue Supermarts which runs DMart stores. Zee Business' Devanshi Ashar has a detailed report on the current performance and future prospects of the company.

Around 50 percent stores of Avenue Supermarts are closed because of the nationwide lockdown. The number of customers have come down significantly over the last few weeks. The footfalls have been low even in 50% stores which are open as of now. Currently, the company is selling FMCG goods (Fast Moving Consumer Goods) and other essential goods. Sale of non-essential items have come to a halt. The company has been receiving orders on its online platform, but that is a small portion of its entire operations. This is not contributing majorly in its overall income.

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For Avenue Supermarts, a lion's share of its revenue comes from the food segment at around 51%, while 20  per cent from FMCG while the remaining 29 per cent comes from general category goods. The margins in its food segment are low at around 2-3 per cent. A relatively high margins comes from the FMCG segment.

Amid the lockdown, when sale of non-essential items have come down, the overall margins could take a hit for the company.

Majority of its DMart stores are located in Western and Southern parts of India. The upcoming stores were also being planned in West and South. The worrying part is that these two regions have been the worst hit in terms of coronovirus cases and that does not augur well for the company.

Credit rating agency Credit Suisse has given a neutral rating to the company with a target price of Rs 2050.

Another rating agency Citi also sees an adverse impact of the lockdown on the company, going forward with margins getting affected because of the hit in the sale of non-essential items.

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Shares of Avenue Supermarts were down 5% today on the BSE ending the day at Rs 2287.90.