20 Jul D-mart
#Dmart 2019 Dated 20 July 2020
Upside-Target/Resistance: 2165, 2265, 2400 & 2525
Downside-Support/Stoploss: 1920, 1875 & 1800
Avenue Supermarts: Shares of Avenue Supermarts, the company that owns retail chain D-Mart, plunged 14.33 per cent last week, after it reported a 87.61 per cent year-on-year (YoY) plunge in consolidated net profit at Rs 40 crore for the June quarter. The company said its consolidated total revenues fell 33.22 per cent YoY to Rs 3,883 crore in the June quarter affected by a strict lockdown.
Covid-19 led restrictions has significantly impacted the operations of the stores, footfalls, supply chain and new store construction. DMart added only 2 stores in Q1FY20, Vs 8 YoY. With more relaxation in restrictions, DMart’s sales started to recover by 80% or more of pre-Covid sales wherever allowed to operate. DMart’s 36% of the stores are in Maharashtra (highest Covid cases). However, due to ongoing uncertainties around Covid spread, discretionary consumption (non-FMCG) continues to be under pressure which will negatively impact gross margin. We expect new store additions will be significantly lower in FY21 on YoY basis but to ramp up in FY22. The company is using proceeds from recent QIP (Rs.4098cr) for debt reduction and expansion.
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