Street View: Parent of India's DMart sees margins contract on fall in user spends

Avenue Supermarts

15/05/2023 08:20

** Shares of Avenue Super Marts Ltd  AVEU.NS , which operates
the DMart chain of retail stores, fall as much as 4.7% to
3,506.6 rupees
    ** Slump comes after company's fourth-quarter profit missed
estimates and core profit margin contracted as consumers curbed
discretionary spending.
    
    ANALYSTS FLAG PRESSURE ON MARGINS
    ** ICICI Securities (maintains HOLD, revises TP to 3,800
rupees from 3,900 rupees) flags underwhelming revenue
performance due to continued underperformance in the General
Merchandise and Apparel (GM&A) segment, which negatively
affected the margin mix
    
    ** Motilal Oswal Financial Services (maintains NEUTRAL; TP
at 3,895 rupees) flags weak demand in the margin accretive
discretionary category, resulting in a 100-basis point drop in
GM 
    
    ** Ambit Capital (maintains SELL, revises TP to 3,147 rupees
from 3,057 rupees) says lower footfalls likely hurt recovery in
GM&A segment and thus improvement in DMart’s EBITDA margin for
GM segment capped
    
    ** HDFC Institutional Securities (maintains SELL, revises TP
to 3,000 rupees from 3,070 rupees) says low discretionary
purchases keep underlying profitability/unit economics subdued.
FMCG/staples continue to outpace GM&A category 

 (Reporting by Navamya Ganesh Acharya in Bengaluru)
 ((Navamya.GaneshAcharya@thomsonreuters.com; +91 8805175330 ;))