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DMart Earnings Mixed: HDFC Securities Maintains Positive Outlook
13 Jul
Summary
- DMart revenue rose 15.1% YoY, but same-store growth slowed.
- HDFC Securities trimmed earnings estimates for DMart.
- Buy recommendations retained for LTM, Indian Bank, Bank of Maharashtra.
HDFC Securities has issued a post-results review on Avenue Supermarts (DMart), LTM Ltd., Indian Bank, and Bank of Maharashtra, maintaining a generally positive outlook despite varied earnings. The brokerage has reiterated its 'Buy' recommendations for LTM, Indian Bank, and Bank of Maharashtra. For DMart, an 'Add' rating was maintained.
DMart's standalone revenue saw a 15.1% year-over-year increase, largely propelled by growth in non-metro locations. However, same-store sales growth moderated to 5.5%, influenced by slower performance in established metro stores. Gross margins improved by 46 basis points to 15.1% due to a more favorable product mix, particularly in general merchandise and apparel.
While DMart's profitability remained robust, HDFC Securities has reduced its earnings estimates for FY27 and FY28 by approximately 3% and 2%, respectively. This adjustment stems from DMart's weaker-than-anticipated performance in major metro areas. Consequently, the target price for DMart was lowered from Rs 4,300 to Rs 4,150.
