The share price of D-Mart retail chain operator Avenue Supermarts Ltd plunged over 6 percent in the early trade on Monday.
The share price of D-Mart retail chain operator Avenue Supermarts Ltd plunged over 6 percent in the early trade on Monday after the company reported weak numbers on all fronts for the first quarter of fiscal 2021, impacted by the COVID-19 crisis.
Recommended ArticlesView All
China COVID protest: Xi Jinping can't blame the protesters — the world will be watching
IST9 Min(s) Read
The stock fell as much as 6.03 percent to hit its intraday low of Rs 2,182 per share on the BSE. However, it recovered later, trading 2.47 percent lower at Rs 2,264.85 apiece at 9:53 am.
The company's consolidated net profit in Q1FY21 fell 87.59 percent to Rs 40.08 crore from Rs 323.06 crore in the same period last year. Total revenue from operations during the quarter under review declined 33.21 percent to Rs 3,883.18 crore as against Rs 5,814.56 crore, YoY.
"Covid-19 continued to spread across the country. The ensuing restrictions have had a significant impact on our operational and financial performance in the quarter," said Neville Noronha, CEO and Managing Director, Avenue Supermarts. Discretionary consumption continues to be under pressure, especially in the non-FMCG categories. This impacted gross margins negatively.
"In addition, in certain cities authorities are once again insisting on selling only essential products. Hence our future revenues continue to remain uncertain," the company said.
Morgan Stanley remained 'Overweight' on the stock with a target price of Rs 2,758 per share.
“F21 trends will be weak given the restrictions on store operations, lower value focus among consumers, and weaker mix. We believe an increased focus on online delivery will help. Ownership model and a strong focus on cost efficiency are even more imperative in the current times,” the brokerage said.
Credit Suisse noted that the full impact of COVID led to 85 percent profit decline in Q1.
“The company’s business model is built on a high throughput per store, based largely in big cities, which are the worst impacted by COVID-19. The longer the disruption lasts, the greater the probability of some consumers permanently shifting to e-commerce,” Credit Suisse said in a noted.
The brokerage maintained an 'Underperform' rating with a target at Rs 2,000 per share. It also cut FY21/22 Earnings Estimates by 13 percent/8 percent.