Home / Markets / Stock Markets /  Radhakishan Damani-backed DMart rises over 29% in Q2FY23, may regain over 5,100 by FY24

Radhakishan Damani-backed Avenue Supermart listed as DMart is expected to cross over the 5,100 mark probably by FY24-end. DMart is a multibagger stock rising around 627% since its market debut. Currently, DMart shares are under 4,400 levels. However, in the Q2 of FY23, DMart shares witnessed double-digit growth. Analysts at Prabhudas Lilladher have given a 'buy' rating on DMart stock on expectations of the retailer seeing huge runaway growth with h potential to open 1500 stores. Also, D’Mart Ready scaling up rapidly, and EBIDTA breakeven is expected by FY25.

On BSE, DMart shares closed at 4,391.75 apiece up by 140.80 or 3.31% on Friday. The company's market cap is around 2,84,486.45 crore.

Damani is the founder of DMart. He is also a renowned Indian investor managing his portfolio through his firm, Bright Star Investments.

In the second quarter of FY23 (July to September), DMart shares have soared by at least 29.30% on Dalal Street. The share stood at 3,396.3 apiece on June 30, 2022.

DMart debuted on stock exchanges on March 21, 2017. On BSE, the stock listed at about 102% premium at 604.4 apiece against its IPO's upper price band.

From its listing price, DMart shares have skyrocketed by nearly 627% on Dalal Street. Last year, the stock had touched an all-time high of 5,899.90 apiece. However, the stock has been corrected since then.

The supermarket chain of DMart stores is owned and operated by Mumbai-headquartered Avenue Supermarts. DMart is a one-stop supermarket chain that aims to offer customers a wide range of basic home and personal products under one roof.

Should you buy DMart shares?

Amnish Aggarwal and Anushka Chhajed analysts at Prabhudas Lilladher in their latest report dated September 30, said, "We are upgrading our EPS estimates (2.8%/4.2% for FY23/24 and introduce FY25 EPS estimate) and our DCF based target price to Rs5120 (Rs4636 earlier). we believe D’Mart will gain significantly in FY23 from throughput in stores opened during covid. We remain confident that the company’s strategy of “Everyday Low Prices" (EDLP) will push sales during the current high inflation scenario and will attract the middle-class to organized retail from unorganized retail. With a strong balance sheet and the efficient execution capability of the management, we expect sustained growth in coming years."

Further, the analysts are positive on DMartReady as sales double in FY22 (Rs1.4 billion in FY19 to Rs16.6 billion in FY22), operations extend in 12 cities and pick-up points increase to 519. Their report said, "Management seems more confident of the scalability of this format, we expect it to achieve sales of Rs54bn with EBIDTA breakeven in FY25."

Also with the festive demand hitting, the analysts report said, "D’Mart will witness strong growth in the zero covid restrictions environment. We believe D’Mart has a huge growth runway ahead given low probability of heightened competition in modern trade, 1500+ store potential in existing clusters (current stores 294), and gradual scale up in D’Mart Ready."

"We estimate 42% PAT CAGR over FY22-25 and retain BUY with rise in DCF based target price to Rs5118 (Rs4636 earlier)," the report said on valuation.

In the first quarter of FY23, DMart's standalone net profit increased multifold at 680 crore compared to 115 crore in the corresponding quarter of last year. PAT margin stood at 6.9% in Q1FY23 as compared to 2.3% in Q1FY22. Total Revenue in Q1FY23 stood at 9,807 crore, as compared to Rs.5,032 crore in Q1 of FY22. EBITDA came in at 1,008 crore in Q1FY23 against 221 crore in the corresponding quarter of last year. EBITDA margin was strong at 10.3% in Q1FY23 as compared to 4.4% in Q1FY22.

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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