HDFC Securities and JP Morgan say Sell Avenue Supermarts

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HDFC Securities and JP Morgan say Sell Avenue Supermarts

By Aditya Raghunath -- Avenue Supermarts Ltd (NS: AVEU ), the owners of the D-Mart retail chain, reported its numbers for the March quarter of 2021. Net profit was up 52.6% at Rs 413.88 crore compared to Q4FY20, and revenue was up 18.5% year-on-year to Rs 7,411.7 crore.

However, HDFC (NS: HDFC ) Securities has a sell call on the stock with a target price of Rs 2,160. The stock is currently trading at Rs 3,032. This indicates a downside of almost 29%. JP Morgan is also underweight on the stock with a target of Rs 2,700.

HDFC Securities’ rationale is that the stock is overvalued. D-Mart management highlighted that the second COVID wave has been more painful. Around 80% of its stores were operating at less than 4 hours/day or are shut down momentarily. The company also said that a more optimistic inventory plan after the unlock has led to excess inventory since the second lockdown.

The company, in a statement, also said that the restrictions and local level enforcements have become much stricter. Their shops are shut for operations for one to two weeks or shut on weekends. These shutdowns have had an adverse and severe impact on its revenues. It is probably safe to say that Q1FY22 numbers won’t be great.

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  • Syed Viquar Ahmed Quadri @Syed Viquar Ahmed Quadri
    HDFC Securities do not have good analysts.  Even JP Morgan did not work out properly.  Since last one year we did not see the levels of 3,032 and 2700. As of Today 6 Dec.2022 52wk Low is much more higher than above predictions.  Retail Investors are creating panic in Fund Managers and Operators.
    Like 0

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