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D-Mart parent Avenue Supermarts’ shares opened at Rs 644 a share and touched a high and a low of 657.50 and 625.30 a share on BSE. Photo: Mint
D-Mart parent Avenue Supermarts’ shares opened at Rs 644 a share and touched a high and a low of 657.50 and 625.30 a share on BSE. Photo: Mint

D-Mart shares close marginally lower on day after listing

A day after listing, the shares of D-Mart's parent Avenue Supermarts settled at 638.55, down 0.34% from the previous close

Mumbai: The shares of Avenue Supermarts Ltd, parent organisation of D-Mart stores, on Wednesday closed marginally lower on BSE, a day after the scrip closed up 114% on its listing day.

The stock opened at 644 a share on Wednesday and touched a high and a low of 57.50 and 25.30, respectively. The scrip settled at 638.55, down 0.34% from the previous close.

India’s benchmark Sensex Index fell 1.08% or 317.77 points to close at 29167.68 points.

At the closing hours, total market capitalisation of the company stood at Rs39,916.44 crore which is still higher than that of Indiabulls Housing Finance, Power Finance Corporation, Marico, Bank of Baroda, UPL, Pidilite Industries, Bharat Electronics Ltd, Pidilite Industries and Idea Cellular Ltd.

On Tuesday, the stock closed up 114% at 641.60 a share after its initial public offer (IPO) to raise ,870 crore was subscribed more than 100 times earlier this month.

“We expect premium valuations to sustain given strong growth and limited options to play organised retail story in India", said Amnish Aggarwal, analyst with Prabhudas Lilladher in a note to its investors on 21 March. The brokerage firm has initiated ‘buy’ rating with a target price of Rs660 a share.

The supermarket chain, with a focus on value-retailing, opened its first store in Mumbai in 2002, and expanded to 118 stores as of 31 January this year.

Aggrawal estimates that at the rate of 15 new stores opening in a year, compound annual growth rate (CAGR) of 4.2% in bill/store/day and 5% in average bill value will enable the company to post the CAGR of 29.6% in earnings before interest, tax, depreciation and amortization. This translates into 37.7% growth in the profit before tax from operations and 39% in EPS over FY16-19.

The company is likely to be debt-free with an estimated net cash of Rs1,000 crore by FY19, Aggrawal added.

For the nine months ending December 2016, the company reported a total revenue of Rs8,803 crore. Its net profit grew at a CAGR of 40.55% in two years to Rs318.76 crore in fiscal year 2016. For the nine months to December, its net profit was Rs387.47 crore.

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