India’s DMart slides after posting first revenue drop in three years

BENGALURU, Oct 16 (Reuters) – Shares of India’s Avenue Supermarts (AVEU.NS) posted their steepest drop in 5 months on Monday after the DMart retailer chain operator posted its first drop in quarterly revenue in three years.

The retailer’s standalone revenue after tax fell practically 10% within the July-September quarter, whereas its EBITDA margin shrank to eight.1% from 8.6% a 12 months in the past, contracting for the fifth straight quarter, the corporate mentioned on Saturday.

And whereas whole income rose 18.5%, gross sales development slowed within the high-margin basic merchandise and attire (GMA) enterprise. The phase’s contribution to whole gross sales additionally fell, to 23.2% within the first half of fiscal 2024 from 24.75% a 12 months in the past.

Centrum Broking mentioned GMA is the highest-margin class for DMart, estimating EBITDA margins of over 20% every quarter. It mentioned the COVID-19 pandemic first delayed a restoration within the unit, with the present excessive inflation setting delaying progress.

Nonetheless, Motilal Oswal expects DMart to learn from a pickup in discretionary spending within the pageant season. That, together with sturdy retailer additions, is prone to drive an enchancment in revenue within the second half of fiscal 2024, the brokerage mentioned.

Each Centrum and Motilal Oswal retained their “purchase” rankings on DMart’s inventory.

The typical ranking of the 24 analysts protecting the inventory is “purchase” and their median worth goal is 3,960 rupees, in accordance with LSEG knowledge.

DMart shares fell as a lot as 4.1% on Monday. They have been final down 2.4% at 3,843.55 rupees as of 11:21 a.m. IST, extending their year-to-date decline to five.5%.

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