Avenue Supermarts hits new high; up over 200% against IPO price

The hit a new high of Rs 996, up 4%, extending its Tuesday's 3% gain on the NSE

Avenue Supermarts, which operates supermarket chain D-Mart stores, hit a new high of Rs 996, up 4% in intra-day trade, extending Tuesday’s 3% gain on the National Stock Exchange (NSE). The stock is trading at its highest level since listing on March 21, 2017.

Avenue Supermarts (D-Mart) which is promoted by veteran ace investor Radhakishan Damani rose 233% against its initial public offer (IPO) price of Rs 299 per share. The stock had ended at Rs 642 on first day of its listing, and has rallied 55% since then. On comparison, the benchmark Nifty50 index gained 6% during the same period.

D-Mart is an emerging national supermarket chain that offers customers a range of home and personal products under one roof. The Company offers a wide range of products with a focus on foods, non-foods (FMCG) and general merchandise & apparel product categories.

The company had reported 48% year on year growth in its reported net profit of Rs 175 crore in June 2017 quarter (Q1FY18) as compared to Rs 118 crore in the corresponding quarter of last fiscal. The company’s EBITDA ((earnings before interest, taxation, depreciation and amortisation) margin was at 8.4% in Q1FY18 as compare to 8.8% in Q1FY17.

Analyst at JP Morgan forecast 28% revenue CAGR (compound annual growth rate) over FY17-20 led by new store additions and healthy SSS (same-store sales) growth rates. The brokerage firm forecast SSS growth to moderate from an average of 23% witnessed over the past four years to 17% over the next three years.

“We forecast EBITDA margin of 8.6%-8.9% over FY18-20E led by operating leverage. The margins to be supported to some extent by better sourcing discounts, which may result from increasing economies of scale,” JP Morgan said in the company’s annual report takeaways.

At 10:11 am, the stock was up 3% at Rs 989 on NSE as compared to 0.33% rise in the Nifty50 index. A combined 1.13 million shares changed hands on the counter on NSE and BSE.