Analysis of Dmart Share , Avenue Supermarts Ltd|

avenue supermarts ltd. dmart

Dmart brand of Avenue Supermarts Ltd. Large cap stock, deep financial and technical analysis

Fundamental analysis of Avenue Supermarts Ltd, DMart

Avenue supermarts is engaged in the business of Organised retail and Supermarket brand name D Mart. Avenue supermarts have 246 stores in 11 states and one union territory which accounts for 11.8 million square feet of the retail business area. Alone Maharashtra has 58 stores followed by Gujarat which has 26 stores. the company follows a cluster-based expansion Bringing about a minimal cost structure. Its presence is restricted to western and Southern Indian states. 

DMart cluster based expansion

Revenue breakup 

DMart Revenue breakup
52%Food segment
20%FMCG segment 
28%General Merchandise and Apparel segment

The company Sales revenue per retail business per square ft is Rs 32,879 for FY20

Steady Store network expansion

DMart’s center plan of action is driven by Value retailing. The company has opened 38 new stores in the FY20 and the company is focusing on penetrating into Tier 2 & 3 cities where there is an absence of Organized large retailing.

DMart Stores

E-commerce 

DMart through its subsidiary Avenue E-Commerce Limited provides online grocery retail ready in selected areas in Mumbai. 

The company closed down two of its stores in Mumbai on Aug, 20 and converted the same into local fulfilment center for E-commerce deliveries. This is the first time where the company has closed down its stores since its IPO.

Radha Krishan Damani.Founder of DMart.

Radhakishan Shivkishan Damani is a self-made billionaire investor, businessman, and the founder of DMart. He also manages his portfolio through his Investment firm, Bright Star Investments Limited. He was born in a Marwari family. He dropped out of his studies of commerce at the University of Mumbai. After the death of his father who worked on Dalal Street, Damani left his ball-bearing business and became a stock market broker and investor. He quit the stock market in 2000 to start his own hypermarket chain, DMartt, setting up the first store in Powai in 2002.

Important Financial Ratios of Avenue Supermarts Ltd.

·        Market Cap₹ 274,906 Cr.
·        Current Price₹ 4,244
·        High / Low₹ 5,900 / 3,185
·        Stock P/E135
·        ROCE15.8 % 
·        ROE11.5 %
·        Profit growth76.7 %
·        Debt to equity0.05
·        EPS₹ 31.5
·        PEG Ratio 5.23

Results of Avenue Supermart

  1. The company has shown quarter-on-quarter sales with 8,786 cr. on Mar 22 to 10,038 cr. on Jun 22.
  2. Net profit has increased from 427 cr. on Mar 22 to 643 cr. on Jun 22.  there is an increase in yearly sales from 24,143 cr. on Mar 21 to 30,976 cr. on Mar 22 and TTM being 35,831 cr.
  3. Net profit also increased from 1,493 cr. on Mar 21 to 1,493 cr. on Mar 22 and TTM being 2,040 cr.
  4. The borrowings are negligible(664 cr.)  compared to share capital plus reserve(648+ 13,030 cr. )
  5. The company has fixed assets of 9260 cr. and CWIP IS 1,129 cr.
DMart results

Conclusions after examining the financials of Avenue supermarts

  • The company is almost death free.
  •  the company has delivered the highest ever sales QOQ and YOY basis.
  • Company has delivered the highest ever prophets both on QOQ and YOY basis.
  • The company has shown compounded sales growth of 41% and compounded profit growth of 77%  TTM.
  • The cash flow from operating activities is 1372 cr. which means whatever company is earning as profit, it is receiving in the form of cash.
  • The Holdings of promoters in the company are highest at 75%, FII has 8.5 9%, and DII has 6.88 %. Retail  Public has a very small holding Of just 9.5% out of which Ignatius Navil Noronha, CEO of Avenue supermarts holds 2.02 %.
  • The company is trading 20 X its book value.
  • Company has a high PE of 135, which is justified by increased net profits.
  • The Company Has a lot of growth scope as its stores cover only 40% of India.

Technical analysis 

  1.  Highest ever results = highest ever price-The company has posted highest ever sales and highest ever results on both quarter on quarter basis and year on year basis. so it is Expected that the stock Price  will go up to the highest ever price. This means that there is a potential of 37 % Current market price. The target price would be 5913. 
  2. Complex cup and handle pattern- Complex cup and handle pattern is formed where in there is one cup up and multiple handles. Here there is an upside potential of 17% target price of 4772.
DMart technical analysis
Highest ever results = highest ever price image courtesy :Tradingview.com
DMart technical analysis
Complex cup and handle pattern Image courtesy : Tradingview.com
Complex Cup and Handle Target image courtesy Tradingview.com

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Books recommended

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Disclaimer- All investments and trading in the stock market involve risk. Any decision to place a trade in the financial markets, including trading in stock should only be made after thorough research. Trading strategies or related information mentioned in the article is for informational purposes only. Use your due diligence before investing

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