Avenue Supermarts share price falls after Q1 business update

Avenue Supermarts share price dropped over a percent on Wednesday after the DMart stores operator reported its business update for the first quarter of FY25. DMart shares fell as much as 1.63% to ₹4,700.00 apiece on the BSE.

Avenue Supermarts' provisional standalone revenue from operations in Q1FY25 was at ₹13,711.87 crore, registering a growth of 18.3% from ₹11,584.44 in the year-ago quarter.

In a regulatory filing, Avenue Supermarts said its total number of stores as of June 30, 2024 stood at 371. The company added seven new stores in the quarter ended June 2024.

The company’s revenue per store rose 5% YoY to ₹149 crore. Revenue per sqft increased by 4% YoY to ₹35,935. The gap between revenue/store and revenue/sqft stood at ~1%, according to brokerage firm Motilal Oswal.

“Revenue per sqft has been growing for the last 4-5 quarters (4-6% YoY growth in each quarter). In the last three years, revenue/sqft remained subdued due to the addition of large-size stores and weak discretionary spending (revenue contribution 23-25%). This trend has been reversing gradually for the last 4-5 quarters, which is evident from the narrowing gap between revenue/store growth and revenue/sqft growth,” Motilal Oswal said.

The brokerage firm has a ‘Neutral’ rating on Avenue Supermarts shares with a target price of ₹5,310 per share.

Foreign brokerage Citi said DMart’s Q1 business update shows no sign of growth acceleration and remains cautious on the stock at current valuation given risks around store additions, a report said.

Citi believes the company’s revenue per sqft continues to be impacted due to adverse product mix and new store additions in smaller towns. It has a ‘Sell’ rating on Avenue Supermarts shares with a target price of ₹3,400 apiece.

Avenue Supermarts share price has gained over 10% in one month, while the stock is up more than 17% year-to-date (YTD).

At 10:47 am, Avenue Supermarts shares were trading 0.08% lower at ₹4,774.00 apiece on the BSE.

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