DMart operator Avenue Supermarts is likely to post a strong growth in December quarter earnings on Saturday driven by steady same-store growth and rampup of revenues from new stores opened in the first nine months.
Brokerages see the company reporting year-on-year (yoy) profit growth in the range of 33-70 per cent. The sales are likely to be between Rs 6,000 crore and 6,500 crore.
“We expect 110 bps YoY expansion in EBITDA margins primarily on account of higher GMs and operating leverage. Sharp sequential profitability improvement is on account of Q3 being a seasonally strong quarter with higher sales contribution from high-margin products,” said Kotak Securities. The broker pegs profit at Rs 435.5 crore.
Edelweiss Securities expects new stores added over the last 24 months to clock run-rate of Rs 45 crore per annum. The broker calculates net at Rs 343.1 crore and sales at Rs 6,144.8 crore.
“We expect EBITDA margin to remain flattish on a QoQ basis as the competition in grocery retailing continued to remain strong during the quarter. For tax rate, we have considered 25.2 per cent, and hence expect strong PAT growth for the quarter,” Edelweiss said.
However, few brokers see margins for the company to be under pressure due to higher discounts during the quarter.
“As per our channel check, we note that DMart offered the highest discount during the month of November and December. However, healthy retail expansion and improvement in SSSG should help drive top and bottom lines,” said IDBI Capital in a note.
It said that store addition rate and gross margin trend will be key things to watch on Saturday.
Source: Economic Times
