DMart, operated by Avenue Supermarts, declared its Q3 numbers over the weekend. Avenue Supermarts shares plunged 6% in Monday trade to an intra-day low of Rs 3,469.95. The fall in stock price came after brokerage houses cut the target price on Avenue Supermarts as they see pressure on margins poon high competition from quick commerce companies.
Here are 4 reasons why Avenue Supermarts’ (DMart) shares are falling 1. Motilal Oswal cuts target price
The brokerage house, Motilal Oswal, slashed the target price on Avenue Supermarts to Rs 4,450 from Rs 4,750, down 6.3%. This is still a 21% upside from the current market price of Rs 3,686.25. It has a ‘Buy’ rating on the stock. The brokerage firm said that the company is facing pressure due to rising competition from quick commerce firms. It cut the earnings per share estimates by 4% for FY25 and 7% for FY27. The acceleration in “store additions remains the biggest growth driver for DMart, and we expect the pace of store additions to pick up in 4Q (build in 40 store additions in FY25),” added Motilal Oswal Financial Services.
2. Nuvama Wealth Management cuts target price
Nuvama Wealth Management cut the target price on Avenue Supermarts to Rs 4,212 from Rs 5,040, maintaining the ‘Hold’ rating on the stock. The company is prioritising market shares over margins, said Nuvama in a research note. It trimmed the revenue and net profit estimates for FY25 and FY26.
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Another brokerage firm, ICICI Securities in a research note said that there is uncertainty in the medium-term growth trajectory. However, it pointed out that the company’s growth trajectory on a like-for-like basis has shown improvement. Like-for-like (LFL) growth is a metric that measures sales growth by comparing only those stores that have been open for at least a year, excluding the impact of new or closed businesses. The brokerage firm has maintained a ‘Reduce’ rating on the stock,
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