12 DMART share price target reports by brokerages below. See what is analyst's view on DMART share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Avenue Supermarts Ltd (DMart) owns & operates India’s most profitable supermarket, DMart. It provides products like Food, Non-Food (FMCG), General Merchandise & Apparel through 216 stores (total 8mn sq. ft). We downgrade DMart to Reduce rating with new Target of Rs2,100 (Rs2,400 earlier) factoring Covid-led impact on growth and expensive valuation. Q1FY20 revenue de-grew by ~34%YoY and PAT de-grew by 85%YoY. Gross/EBITDA/PAT margins declined by 240bps/750bps/450bps to 13.7%/2.8%/1.3%. Covid-19 led restrictions has significantly impacted the operations of the stores, footfalls, supply chain and new store construction. DMart added only 2 stores in Q1FY20, Vs 8 YoY. With more relaxation in restrictions, DMart’s sales started to recover by 80% or more of pre-Covid sales wherever allowed to operate. DMart’s 36% of the stores are in Maharashtra (highest Covid cases). However, due to ongoing uncertainties around Covid spread, discretionary consumption (non-FMCG) continues to be under pressure which will negatively impact gross margin. We expect new store additions will be significantly lower in FY21 on YoY basis but to ramp up in FY22. The company is using proceeds from recent QIP (Rs.4098cr) for debt reduction and expansion. Expect revenue/PAT to grow at 15%/17% CAGR, value DMart on a DCF basis to arrive at a target of Rs2,100 implying P/E of 74x on FY22EPS.
Avenue Supermarts Ltd (DMart) owns & operates India’s most profitable supermarket, DMart. It provides products like Food, Non-Food (FMCG), General Merchandise & Apparel through 216 stores (total 8mn sq. ft). We downgrade DMart to Reduce rating with new Target of Rs2,100 (Rs2,400 earlier) factoring Covid-led impact on growth and expensive valuation. Q1FY20 revenue de-grew by ~34%YoY and PAT de-grew by 85%YoY. Gross/EBITDA/PAT margins declined by 240bps/750bps/450bps to 13.7%/2.8%/1.3%. Covid-19 led restrictions has significantly impacted the operations of the stores, footfalls, supply chain and new store construction. DMart added only 2 stores in Q1FY20, Vs 8 YoY. With more relaxation in restrictions, DMart’s sales started to recover by 80% or more of pre-Covid sales wherever allowed to operate. DMart’s 36% of the stores are in Maharashtra (highest Covid cases). However, due to ongoing uncertainties around Covid spread, discretionary consumption (non-FMCG) continues to be under pressure which will negatively impact gross margin. We expect new store additions will be significantly lower in FY21 on YoY basis but to ramp up in FY22. The company is using proceeds from recent QIP (Rs.4098cr) for debt reduction and expansion. Expect revenue/PAT to grow at 15%/17% CAGR, value DMart on a DCF basis to arrive at a target of Rs2,100 implying P/E of 74x on FY22EPS.
D’Mart 1Q21 shows full impact of COVID19 with lower footfalls, higher cost of operations and restrictions on sale of non-essentials. However, being positive at EBIDTA and PAT level shows the resilience of business model with little rentals and interest cost. Although recovery of 80%+ of pre-Covid sale in most stores operating without restrictions is positive, revival of traditional trade, rapid shift towards online formats and lower sales of higher margin apparel and general merchandise and costs related to sanitization and social distancing will impact profitability. We believe D’Mart has higher risk of weakness in 1HFY21 given that COVID sensitive clusters of Maharashtra, Gujarat and Telangana are ~63% of total stores and ~75% of sales. D’Mart has strong balance sheet, and would look at sustaining expansion plans, however delay in store opening looks certain, which will impact growth in FY22 as well. We estimate flattish EPS in FY21 and 46% growth in FY22. Although D’Mart is a compelling play on Hypermart segment, valuations at 79.4xFY22 and 63.0xFY23 with current price justification at 8.3% terminal growth (post 2034) force us maintain REDUCE rating (Target price of Rs1695 46xFY23 EPS).
Unlike other format stores, grocery retailers catering to Essentials are seeing a lower impact of the lockdown as it caters to a large proportion of low-ticket items. DMART’s non-discretionary revenue contributes ~72% to total sales (FY20). The company’s equity funding of INR40b in 4QFY20 strengthened the balance sheet with net cash position, enhancing liquidity in such uncertain times. Nevertheless, our channel checks suggest Jul’20 is being impacted by the second phase of lockdown, with nearly 20% of stores being closed once again. The NonGrocery category is operating at double-digit LTL decline. Thus, there is risk of slow recovery, which could extend well beyond 1HFY21. We value D-Mart at an FY22E EV/EBITDA multiple of 42x, maintaining TP of INR2000 (20% discount to the three-year average EV/EBITDA multiple of 53x). This still implies a 14% downside. Maintain Sell.
We forecast ASL to report healthy top-line CAGR of ~19% to Rs33,730cr over FY2019-21E on the back of strong store addition every year and higher footfall as ASL offers significant discount compared to e-commerce, Modern trade & General trade. On the bottom-line front (reported PAT), we estimate ~26% CAGR to Rs1,825cr due to strong revenue and gradual improvement in operating margin. Thus, we maintain BUY on the stock with Target Price of Rs2,564.
We are cutting FY21 and FY22 EPS estimates of D’Mart by 16.8% and 8.1% due to 1) Lockdown impact on footfalls/sales 2) higher cost of operations 3) delay in store openings and safety cost. Although worst seems over given MOM improvement in May sales, expect near term margins to suffer due to higher cost and poor sales mix. D’Mart has achieved more broad based store openings in FY20 as against FY19 as top 4 clusters have just 42% of new openings as against 85% in FY19. We believe D’Mart has higher risk of weakness in 1HFY21 performance given that COVID sensitive clusters of Maharashtra, Gujarat and Telangana are 63% of total stores and ~75% of sales. D’Mart has strong balance sheet, and would look at sustaining expansion plans. We estimate flattish EPS in FY21 and 46% growth in FY22. Although D’Mart is a compelling play on Hypermart segment, valuations at 82xFY22 and 65xFY23 with current price justification at 9% terminal growth looks unappealing. We maintain REDUCE rating with target price of Rs1658 (45xFY23 EPS, Rs1875 Earlier at 45xFY23 EPS). Retain Reduce.
In the last one month since the lockdown, the stock has risen ~8% against potential impact on EBITDA of 20%/14% and PAT of 22%/15% over FY21/FY22E. Thus, the stock has performed well. It is currently trading at EV/EBITDA of 46x and P/E of 68x on FY22E. Subsequently, we believe the stock could see some downward pressure in the near term until clarity emerges on the lockdown situation. We retain Sell rating with TP of INR1,750, assigning 35x EV/EBITDA on FY22E
D’Mart trades at 75xFY22 EPS and 4.2xEV/sales due to growth visibility and strong balance sheet as against global leaders Which trade at 0.6- 0.8xEV/sales. Although long term growth outlook seems bright, the stock is factoring in 9% terminal growth as per DCF. Retain reduce with a target price of Rs1875 at 45xFY23 EPS (Rs1639 based on 46xFY22 EPS). Retain Reduce
Its consistent superlative performance has ensured strong valuation re- rating in the last three years since its listing and resulted in massive outperformance vs. market and other Retail peers. Therefore, the relative moderation in revenue growth coupled with high capex could impact DMART’s return ratios and could compress valuation multiples in our view, despite its continued stellar relative earnings outperformance . Valuations at 54x FY22 P/E and ~35x FY22 EV/EBTTDA are expensive and provides no margin of safety. Maintain SELL with TP of INR 1700.
We remain sellers on the counter as we believe 1) D-MART's throughput, cost and working capital efficiencies are near peak. 2) Cost of retailing is inching up. 3) Well capitalized e- grocers/online biggies (Amazon /Flipkart) are getting price- war-ready as can be seen from the significant bump up in their authorized capital. (This could increase cost of retailing in general for the industry over the medium to long term as offline retailers may be arm-twisted into taking fulfillment cost on their books – not factored in). We largely maintain our estimates/TP and we bake Revenue/EBITDA/LTL APAT CAGR of 26/30/30% CAGR over FY19-22 and currently have a DCF-based TP of Rs. 1,250/sh, implying 24x Dec-21 EV/EBITDA. Stock currently trades at 42/34x FY21/F22 EV/EBITDA.
We believe higher store openings in 3Q boosted sales while 20bps margin expansion was led by operating leverage. We expect the growth momentum to continue and have increased FY20 EPS estimates by 3% (assuming 25% tax rate in 4Q v/s 20% in 3Q) and that for FY21 and FY22 by 1%. We estimate a CAGR of 26.2% in sales and 35.2% in PAT over FY19 - FY22. However, valuations at 67.8xFY21 EPS and 52.7xFY22 EPS don’t leave any room for error. We believe expected supply of shares to fulfill the mandated reduction in promoter stake below 75% will provide a better entry point in the stock. We maintain REDUCE rating with target price of Rs1639 (46xFY22 EPS, Rs1622 Earlier at 46xFY22 EPS). We advise accumulation sub Rs 1650 levels for long term gains.
The recent cut in corporate tax rate is a big positive for D-Mart as it was hitherto a full tax paying company. Incorporating the same, we revise our earnings estimates upwards by ~15%, thereby having a direct positive impact on cashflow generation. Despite a heavy capex nature of the business, D-Mart has a capital efficient business model generating superior RoCE of 23% and fixed asset turnover ratio of 4.1x. Optimal product assortment and stringent inventory management has led to robust inventory turns to the tune of 12.0x. D-Mart continues to trade on expensive valuations. Hence, we reiterate our REDUCE rating on the stock with a revised target price of Rs 1700 (39.0x EV/EBITDA) (earlier TP: Rs 1450).
Valuations at 66.2x FY21 EPS and 51.5x FY22 EPS factors in the expected growth. We downgrade the stock to reduce with target price of Rs1647 (46xFY22 EPS, Rs1411 Earlier at 46xJune 21 EPS). Absolute returns look unlikely in near term post 48% jump in stock price in past 5 months. However sustained growth momentum can provide 20-25% returns over the next 2-2.5 years. OFS and QIP led correction in stock price can provide a good entry point for long term.
Despite performance parameters (return on capital employed of 24%, gross fixed asset turnover ratio of 4.1x) being superior to industry, we believeASL’s growth aspirations are likely to face challenges in terms of intensified competition from new entrants with deep pockets and increased discounting by incumbent e-com players. We build in revenue CAGR of 27% driven by new store additions and steady SSSG. However, we expect margins to remain range bound at 8.2-8.4% in FY19-21E. The stock is trading at rich valuations of 63.9x FY21 EPS and 36.5x FY21E EV/EBITDA. We ascribe a REDUCE rating to ASL with a target price of | 1450 (34.0x FY21E EV/EBITDA).
Faster store additions, debt reduction, tail winds from GST, traction in E-com business will continue to support earnings. The requirement of minimum public shareholding of 35% (currently 18.8%) as announced in the budget may act as an overhang in the medium term. We arrive at a target of Rs1,578 (earlier Rs1,404) and maintain Buy.
As management explained, store additions in Q1FY20 (eight) picked up largely due to the spillover from Q4FY19. Factoring in the surprise on margins, we are raising FY20/21EEBITDA by 5.4%/5.2%. However, we maintain ‘REDUCE’ with a TP ofINR1,350 (earlier INR1,280) in light of margin volatility, anticipated entry of Reliance Retail, overhang of promoter stake sale from 81.2% to 75% by March 2020, and lofty valuations.
We estimate 28 store openings in FY20 and 30 in FY21. We estimate 28.7% sales and 33.1% EBIDTA and 37.4% PAT CAGR over FY19-21 on 50bps margin expansion. D’Mart is planning a QIP (upto 25mn shares) and OFS (to reduce promoter holding to 75%) which can provide an inflow of Rs35bn and fund growth. We value the stock at 46xJune21 EPS and arrive at a target price of Rs1338 (Rs1228, 45xFY21 EPS earlier). Long term outlooks remain positive; invest on declines in run upto to QIP and OFS.
Faster store additions, debt reduction and tail winds from GST will continue to support earnings growth. We believe, the historical high valuations to normalise gradually as per the normalisation of high growth. We currently arrive at a tar- get of Rs1,404 (earlier Rs1,479) and upgrade to Buy from Hold.
DMART has approved issuance of 25m equity shares (QIP placement), in order to achieve minimum public shareholding. This is expected to generate INR31b (at CMP), which should assist in meeting the increasing capex requirements, but could dilute EPS by 4%. We cut TP to INR1,125 (prior: INR1,300) on cut in earnings and multiple, ascribing 26x EV/EBITDA on FY21E; a 20% premium to the target multiple of our coverage companies given its strong execution capability and healthy earnings profile. However, given the risk of earnings deceleration and rich valuation, we believe, the stock should come under pressure. Maintain Sell.
DMart is a strong play on the retail sector’s transition from the unorganised to organised segment. However, in light of margin pressure and rising competitive landscape, we maintain ‘REDUCE/SU’ with TP of INR1,300 (35x 12-month forward EV/EBITDA). At CMP, the stock trades at 33.8x FY21E EBITDA.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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