Avenue Supermarts Q2FY22 Preview: Easing of restrictions, uptick in demand to aid swift profitability recovery
RK Damani's Avenue Supermarts is all set to come out with its September quarter results on 16th October.
RK Damani's Avenue Supermarts is all set to come out with its September quarter results on Saturday. Ahead of the results on 16th October, brokerages have given mixed responses. However, a majority of them expect that the easing of restrictions and uptick in demand will likely augur well for the company in Q2FY22.
"The easing of the Covid-19-related restrictions and an uptick in demand are expected to result in swift profitability recovery for Avenue Supermarts (D-Mart) in Q2FY22," said ICICI Direct in its report.
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The brokerage house said it is expecting the gross margins to dip marginally by 50 bps YoY to 14.0% (up 90 bps QoQ) owing to inflationary pressure. "On account of positive operating leverage, we expect EBITDA margin expansion of 120 bps YoY (310 bps QoQ) to 7.4%. On a favourable base, we anticipate a PAT growth of 83% YoY to Rs 363.9 crore," the brokerage house said.
Motilal Oswal said that the retail industry was one of the most impacted segments during the Covid-19 lockdown. However, with the opening up of the economy, along with the festive season, more than 95 per cent of stores are now operating at full capacity.
The brokerage house was of the view that the retail operations and sales recovery have been broad-based unlike the first Covid-19 wave, which saw tier II/III cities in a much better position vis-a-vis urban area.
Systematix Institutional Equities
Systematix Institutional Equities opined that the company has guided for a 47 per cent YoY/52% QoQ growth in revenues aided by the easing of restrictions, normalized store timings and recovery in demand for general merchandise. "We expect gross margins to improve led by better general merchandise sales, while positive operating leverage should lead to EBITDA margin expansion of 273 bps YoY," it added.
Earlier, Avenue Supermarts Limited in a BSE filing had informed that a meeting of the Board of Directors of the Company is scheduled to be held on Saturday, October 16, 2021 to, inter alia, consider and approve the un-audited standalone & consolidated financial results of the company for the quarter and half year ended on September 30, 2021.
Avenue Supermarts share price:
Meanwhile, Avenue Supermarts stocks traded 4 per cent up in intraday trade on the BSE on Friday. The stocks of RK Damani's retail giant traded last on the Bombay Stock Exchange at Rs 5329.65, up Rs 207.10.
Avenue Supermarts Ltd Q1 results 2021:
Avenue Supermarts Ltd had reported a jump of 132% standalone net profit at Rs 115.13 crore for the quarter ended 30 June 2021. The company posted a net profit of Rs 50 crore in the year-ago period. Total revenue rose 31% to Rs 5,032 crore as compared to Rs 3,833 crore in June 2020. Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in Q1FY22 stood at Rs 221 crore, as compared to Rs 109 crore in the corresponding quarter of last year. EBITDA margin stood at 4.4% in Q1FY22 as compared to 2.8% in Q1FY21.
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