AVENUE  SUPERMARTS LTD-BUY

Target (Rs) Upside % Buying range Stop Loss Risk %
₹ 4,610
17.80
CMP-₹ 3,914
₹ 3,767
-3.76%

Avenue Supermarts Ltd., known as DMart, started in 2000 as a grocery store chain. They have a smart way of growing, opening stores in specific clusters. DMart sells everyday things in three main groups: Foods, Non-foods, and General Merchandise and Apparel. Since opening their first store in 2002 in Mumbai, they’ve grown to 324 stores in various Indian states, covering 13.4 million square feet by March 2023.

Why Investing in DMart is a Good Idea?

  • DMart is really good at managing its supply network. They have 49 distribution centres and ten packing centres. They saw a big increase in sales from 18.1 crore in FY 21-22 to 25.8 crore in FY 22-23.
  • Their ability to get products at low prices and sell them cheaply brings in lots of customers. This means they sell a lot of products quickly and make good money per square foot in their stores.
  • DMart plans to grow its store space by about 20% per year, reaching over 14 million square feet by FY24. They make enough money (Rs. 2,500 – 3,000 crores per year) to pay for this expansion without borrowing much. They also have plenty of cash on hand.
  • They opened nine new stores in Q2FY24, bringing the total to 336 stores. At the end of the quarter, they had 13.9 million square feet of retail space, an increase of 0.4 million square feet.

Looking Ahead

The retail market is expected to grow by 10-11% annually from 2023 to 2028. As the economy improves and inflation stays low, people will likely spend more money. DMart has done well over the years because they keep costs down and offer good value to customers. They expect to keep making a good profit because their stores start making money quickly, they earn more per store than their competitors, they sell a lot of products quickly, and they keep a steady profit margin of about 15%. However, they need to watch how well they do in selling higher-profit items like General Merchandise and Apparel to improve their overall profit margins. Overall, DMart looks like a solid choice for investment based on these points.

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