Avenue Supermarts has underperformed Nifty in last one year; what should the investors do?

Avenue Supermarts share price, Avenue Supermarts Q3 results: Shares of Avenue Supermarts, the parent company of Dmart, rose over 2 per cent in Monday's trade, continuing their winning streak for the second session in a row.

At around 10:15 a.m., shares of Avenue Supermarts traded 0.94 per cent or Rs 36.1, higher on the BSE at Rs 3,876.2 apiece. The market capitalisation of the company stood at Rs 2,52,237.15 crore at around the same time.

Here are some reasons for the positive trend in the stock:

Avenue Supermarts' Q3 results

The company posted a third-quarter result last week, which was in line with analysts' estimates. The profit after tax (PAT) stood at Rs 737 crore against the estimate of Rs 739 crore.

The earnings before interest, tax, depreciation, and amortisation (EBITDA) stood at Rs 1,120 crore, against the estimate of Rs 1,115 crore. Margins stood at 8.5 per cent against the estimate of 8 per cent.

New store

Avenue Supermarts opened a new store at Kamptee, Nagpur (Maharashtra) taking the total store count to 342.

QIP utilisation update

While giving an update to the investors, the company informed them that among the Rs 4,098 crore raised through qualified institutional placement (QIP) on February 11, 2020, Rs 3,928 crore has been utilised by the company for the stated objectives. (Augment long-term resources to finance future expansion, general corporate purposes, and other corporate exigencies, including but not limited to, refurbishment and renovation of existing stores, working capital requirements and strategic investments/acquisitions, repaying/ prepaying a part of our outstanding indebtedness.)

What should investors do?

Avenue Supermarts share price: Past performance

In a year, Avenue Supermarts shares have gained over 5 per cent as against the Nifty 50's rise of over 23 per cent.

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