Avenue Supermarts gains 11% in three days post June quarter 2022 biz update

The company is scheduled to announce June quarter results on Saturday, July 9, 2022.

Shares of Avenue Supermarts (DMart) were up nearly 4 per cent to Rs 3,774.30 on the BSE in Wednesday’s trade, after they surged 11 per cent in the past three trading days, despite the company reported a weak revenue in an update for the first quarter of financial year 2022-23 (Q1FY23). DMart is one of the largest food and grocery retailers in India.

The board of directors of Avenue Supermarts is scheduled to meet on Saturday, July 09, 2022 to consider and approve un-audited standalone and consolidated financial statements for the quarter ended June 30, 2022 (Q1FY23).

That said, the stock has corrected 15 per cent in the month of June, as compared to 4.6 per cent declined in the S&P BSE Sensex.

In an update to Q1FY23, the company’s standalone revenue nearly doubled by 95 per cent year on year (YoY) to Rs 9,806 crore and 70 per cent over Q1FY20 (or pre-COVID) levels.

Besides that, the company was confident of recovery in fast moving consumer goods (FMCG) business. However, the discretionary non‐FMCG segment was hard to estimate due to a secular change after the shift to e-commerce and higher inflationary levels.

“We would be able to give that qualitative interpretation only if there are no more covid-19 shutdowns or restrictions over at least 2 more quarters. High inflation environment is helping us manage our costs better and also deliver relatively better value to shoppers,” the company said in their Q4FY22 results update.

Analysts at Motilal Oswal Financial Services believe that though overall growth looks healthy, estimated LTL revenue dropped 13 per cent in Q1FY23. Moreover, the soft store performance climbed higher due to larger revenue contribution from metros and tier-1 cities on online platforms. 

"DMart added 10 stores in Q1FY23, taking its total store count to 294. In the last three years, it has added 60 per cent stores and 95 per cent area, despite the COVID led lockdowns. This is higher than our expectation of four stores additions in Q1FY23 and its typical heavy store additions in the second half of the fiscal," the brokerage firm said.