Key Points
- Shares of Avenue Supermarts, DMart’s parent company, fell by 9.3%.
- The Q2 earnings report missed expectations, with profits down 12% from last quarter.
- Brokerages have downgraded DMart’s stock, with some target prices dropping to Rs 3,702.
- Increasing competition from online grocery services is putting pressure on DMart.
- Investors should keep an eye on DMart’s performance and how they adapt to competition.
Looma News
Let’s dive into DMart and why its shares are taking a hit. This Monday, the stock for Avenue Supermarts fell a staggering 9.3%, hitting a low of Rs 4,143.60 on the Bombay Stock Exchange. Their second-quarter earnings didn’t meet expectations, and brokerages were quick to react.
DMart reported an 8% increase in profits year-on-year, but investors weren’t thrilled since profits after tax dropped over 12% compared to the last quarter. Their total revenue for Q2 was Rs 14,050.32 crore, up 14% from last year, but that wasn’t enough to impress the market.
Brokerage Reactions
Big brokerages have weighed in on DMart’s performance. JPMorgan downgraded their rating from Overweight to Neutral, cutting the target price from Rs 5,400 to Rs 4,700. They cited rising costs and tough competition from online grocery platforms, especially in major cities.
Then there’s Morgan Stanley, who got even more cautious, downgrading to Underweight and slashing their target price from Rs 5,769 to Rs 3,702. They pointed out that DMart’s sales and profit margins weren’t meeting expectations and that online competition might slow their growth.
Nuvama took a different route, keeping a Hold rating but lowering their target price to Rs 5,040. They mentioned that existing stores aren’t performing well, with only a 5.5% sales rise, which isn’t great compared to previous quarters.
What Should Investors Do?
So, what does this mean for retail investors? DMart is definitely facing some hurdles, especially with rising competition from quick-delivery grocery services. While the company is still expanding, they need to step up to meet expectations. If you own DMart shares, it might be a good idea to keep an eye on how they handle these challenges in the coming months. For those considering a buy-in, watch how DMart competes with online platforms and manages its costs. As of around 10:55 am, shares were down about 7.86% at Rs 4,212.90. And remember, check in with a qualified broker or financial advisor before making investment.
