Multibagger stock Dmart slips despite healthy Q2 results

Source :Sify
Author :Finance Desk
Last Updated: Tue, Oct 19th, 2021, 20:06:50hrs
  • Facebook-icon
  • Twitter-icon
  • Whatsapp-icon
  • Linkedin-icon
Dmart-India

Mumbai: Multi-bagger stock Avenue Supermarts which has had a dream-run so far has had a tumultuous trading session. On Tuesday, the scrip settled 2.85 percent in the red at Rs 4,755.55 per share.

As many as 1.01 lakh shares exchanged hands according to information made available by the Bombay Stock Exchange. Fears of further decline have worried investors. The bigger fear arising after broking agency Edelweiss issued a rating revise.

The broking house called for a reduce rating citing the valuation jump of 92 times the EV/EBITDA without a fundamental change in business.

The unprecedented rally may have stoked fears among investors although the company announced stellar results. For the quarter ending September Avenue Supermarts posted an annual gain of 110 percent in net profit and 46.6 percent in revenue.

Neville Noronha the CEO who has been painted as the next billionaire thanks to his ownership in the enterprise cited the removal of lockdown restrictions for the jump in business.

He was also quoted as saying in news reports that Avenue' stores expanded by 23.7 percent in the month of September 2021 alone. While the business has expanded the gross margins and expenses too have increased.

Broking agency Edelweiss's reports comes at a time when Avenue has made significant strides. The agency believes that a re-rating will depend on store expansion or growing the online business and that none of those are yet visible. It has thereby downgraded the target price to Rs 3,782.

Other broking houses have been kind enough on Dmart's holding company. For instance, Prabhudas Lilladher (Rs 5,359) and Motilal Oswal (Rs 4,900) seemed optimistic on the target price but the underlying commentary does not seem worthy of what a multi-bagger stock like Avenue commands.

Disclaimer: This story is purely informative in nature. 

  • Facebook-icon
  • Twitter-icon
  • Whatsapp-icon
  • Linkedin-icon