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Shares of Avenue Supermarts, which owns and operates retail chain DMart, fell 6.04 per cent after it reported 88 per cent drop in its consolidated net profit for the quarter ending 30 June 2020. Avenue Supermarts was trading at Rs 2,233.55 down 3.82 per cent from its previous close, while the benchmark index, Sensex gained 0.62 per cent to 36822.87.
The company cited Covid-19 for its net profit decreasing to Rs 40 crore as against Rs 323 crore in the year-ago period. The company’s consolidated total income fell 32 per cent to Rs 3,933 crore as against Rs 5,826 crore in June 2019.
Earnings before interest, tax, depreciation and amortization (EBITDA) in Q1 FY21 stood at Rs 112 crore, as compared to Rs 597 crore in the corresponding quarter of last year. EBITDA margin stood at 2.9 per cent in Q1 FY21 as compared to 10.3 per cent in Q1 FY20.
According to Motilal Oswal in a result note said, ‘Unlike other format stores, grocery retailers catering to essentials are seeing a lower impact of the lockdown as it caters to a large proportion of low-ticket items. The company’s equity funding of Rs 4,000 in the preceding quarter strengthened the balance sheet with net cash position, enhancing liquidity in such uncertain times. D-Mart is trading FY2022E EV/ EBITDA multiple of 42 times, maintaining target price of Rs 2,000, 20 per cent discount to the three-year average EV/EBITDA multiple of 53 times’. The brokerage has a sell rating on the stock.
