Brokerages maintained a bullish stance on DMart parent Avenue Supermarts after the company shared expansion plans to drive revenue growth during its analyst meeting.

What Happened: Avenue Supermarts in its June quarter results saw its net profit rise 17.5% from the previous year to  ₹773.8 crore while its revenue from operations gained 18.6% to ₹14,069.1 crore.

During the analyst meet, the company said the slowdown in general merchandise and apparel (GM&A) segment is behind the firm and apparel sales are reviving. The company is also planning aggressive store additions of 60–70 stores annually after a year or two, and expects to have 10%–15% annual growth in terms of store addition over the next four years.

Brokerage Views: Macquarie gave "outperform" call with a target price of ₹5,600. The brokerage shared DMart’s confidence in general merchandise sales recovery.

It is targeting 10-15% store additions and feels FY25 might see 40-45 new stores. The store addition is likely to move towards 60 stores in the future. The brokerage gave "outperform" call on the belief that the company will have continuing relevance of company's value positioning against the growth of quick commerce. 

See Also: Titagarh Sees Q1 Net Profit Grow 8% To ₹67 Cr, Revenue Flat

Motilal Oswal maintained "buy" call with a target price of ₹5,500. The brokerage estimated a compound annual growth rate of 22% and 31% in revenue and net profit over FY24-FY26 with 11% growth in footprint and 9% in revenue productivity. 

The company kept its 20% revenue growth guidance and expects GM&A to rebound to 23% from 22.37% in FY24, though it is still below pre-Covid levels. The company said it’s not going to enter the quick-commerce segment and will continue its existing e-commerce plan with DMart Ready. 

UBS also gave the stock a "buy" call with a target price of ₹6,000. The company's focus on growing revenue will be driven by store additions, the research firm said. It added that the gross margin will remain in the range of 14.5%-15.5% and the GM&A segment is seeing recovery since second half of FY24.

It has closed a few DMart ready pick-up points to focus on home delivery as 45% of deliveries happen within 12 hours, the brokerage noted. It added that the company is investing in hiring new talents and building capabilities for the medium term. 

Price Action: Shares of Avenue Supermarts were up 0.12% to ₹5,033.45 on Wednesday morning.

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