Add Avenue Supermarts stock to portfolio for 20% price rise in one year

DMart is one of the largest retail chain in the country owned and promoted by legendary investor Radhakishan Damani. Avenue Supermarts Ltd, which owns and operates the retail chain DMart posted a standalone revenue of Rs 9,065 crore for the financial quarter October to December 2021 period as against Rs 7432 crore for the same quarter of the previous year. In a regulatory filing to the stock exchanges the company also reported that it’s number of own department stores increased by 17 more stores standing at 263 stores as of 31 December 2021. The December quarter revenue was the highest revenue posted by the company in the last two years and was primarily due to customers increasing their spending budget for their Diwali and Christmas shopping. Another very important factor during this quarterly period was the normalcy in Covid cases around the country boosting customer confidence and inducing a revenge shopping and going out period . But analysts and fund managers are slightly worried about the current month of January 2022, as revenue of the company could decrease due to increase in Omicron infection cases and lockdown around the country could dampen the sales collection. Another factor which the company would have to seriously think about is building its e-commerce platform. Companies and start-ups like Big basket, Jio mart, Swiggy’s InstaMart, Zomato‘s Blankit (formerly Grocers), Dunzo, etc. through their digital focus posing a huge competition to DMart which is primarily focusing on its retail chain off-line business. DMart is expected to post its quarterly results on 8 January and large brokerage houses tracking the company are expecting a 35% year-on-year rise in net profit at around Rs.636 crores and EBITDA margin of 10.3% for the quarter ending December 2021. Most analysts and brokerage houses are bullish on the DMart stock as the company scales up its online platform, and increase its own store model over the next few years. Portfolio investors can add the Avenue Supermarts stock in their investment as it could deliver a 20% price appreciation over the next one year.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.