CLSA has set a target price of Rs 5,107 per share for Avenue Supermarts, implying a 26 percent increase from the stock’s closing price of Rs 4,050 on March 20. They believe that private labels could be a significant driver for the company’s future share gains.
CLSA has initiated coverage on Avenue Supermarts Ltd with a ‘buy’ rating, emphasizing growth opportunities in untapped markets. The brokerage firm pointed out an addressable market surpassing Rs 50,000 crore, with less than 5 percent organized.
CLSA anticipates that private labels could drive the next phase of share gains for Avenue Supermarts Ltd. With a target price of Rs 5,107 per share, representing a 26 percent increase from the stock’s closing price of Rs 4,050 on March 20. D-Mart’s competitive consumer prices are attributed to its efficient operating model. CLSA projects a threefold increase in D-Mart stores by FY34, reflecting the company’s expansion plans across existing and new states. Avenue Supermarts witnessed its shares rise for the third consecutive session on March 20, with weekly performance consistently ending positively over the past five weeks.
Over the preceding six months, Avenue Supermarts has gained nearly 6 percent, while over the past year, the stock has surged by over 20 percent.
About D-Mart
Established by Radhakishan Damani in 2002, Avenue Supermarts operates a retail empire under the D-Mart brand, with its first store opening in Powai, Mumbai.
In the third quarter of fiscal year 2023-24, the D-Mart operator reported a consolidated net profit of Rs 690.41 crore, marking a 17.09 percent increase from Rs 589.64 crore in the corresponding period last year. Additionally, consolidated revenue from operations climbed by 17.31 percent year-on-year to Rs 13,572.47 crore, compared to Rs 11,569.05 crore in the December 2022 quarter.
D’Mart, an Indian hypermarket chain, was established by its owner Radhakishan Damani on May 15, 2002. It operates under Avenue Supermarts Ltd. (ASL). Following its IPO as Avenue Supermarts Ltd., it debuted strongly on the National Stock Exchange (NSE), achieving a record opening. By March 22, 2017, DMart’s valuation reached ₹39,988 crore, making it the 65th largest Indian firm by market capitalization. Notably, it surpassed companies like Britannia Industries, Marico, and Bank of Baroda. As of November 21, 2019, DMart’s market capitalization stood at approximately ₹114,000 crore, positioning it as the 33rd largest among all listed companies on the Bombay Stock Exchange.
DMart, synonymous with affordable groceries and a delightful shopping experience in India, represents more than just a supermarket chain. It embodies a retail revolution spearheaded by the dynamic billionaire, Radhakishan Damani.
Damani’s journey commenced not amidst supermarket shelves but within the bustling realm of stock trading. Mastering the art on the Bombay Stock Exchange, he earned renown for his astute investment prowess and penchant for identifying undervalued assets. This ethos laid the groundwork for his venture into retail.
In 2002, Damani discerned a market gap in India. Existing supermarkets either offered exorbitant prices or compromised on quality. He envisioned a store catering to the middle class, furnishing fresh produce, groceries, and household essentials at unparalleled prices. Thus, DMart emerged.
At the heart of DMart’s triumph lies an unwavering dedication to value. Damani’s creed of “everyday low prices” transcends mere rhetoric; it epitomizes the brand’s ethos. Direct negotiations with farmers and manufacturers enable DMart to circumvent intermediaries, driving down costs and passing on savings to customers. Consequently, patrons discover their preferred brands at prices often surpassing those of traditional kirana stores.
Yet, DMart transcends mere affordability; it champions an enhanced shopping ambiance. Pristine, well-organized stores brim with a diverse array of merchandise. The genial, attentive staff infuse a personalized touch into every shopping encounter, enhancing customer satisfaction.
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