Avenue Supermarts, which operates D-Mart chain of hypermarkets in India, is expected to report double-digit growth in revenue for the December quarter, aided by a favourable base. However, growth in the bottomline will be at a slightly slower pace because of the pressure on profitability.
The company, owned by equity market veteran Radhakishan Damani, will release its numbers on Saturday.
Earlier this month, the company had shared a provisional update on the quarterly performance, wherein it said the revenue rose 25% year on year (YoY) to Rs 11,305 crore.
Consolidated net profit is seen rising 21.5% on-year to Rs 672 crore, based on the average of estimates given by seven brokerages.
Although the topline is likely to have grown in double-digits, some analysts believe that the growth in revenue on a per square feet basis has slowed than what was seen in the preceding three quarters.
“The performance is a tad weaker than expectations as the estimated revenue per sq. ft of Rs 36,000 is softer than revenues of Rs 40,000 generated in the past third quarters,” Kotak Institutional Equities said based on the provisional update shared by the company.
On the profitability front, most analysts expect the gross and operating margin to dip on a YoY basis, due to higher employee costs and operating expenses.Analysts expect operating margin to drop by 40-60 basis points YoY from 9.6%. and Prabhudas Lilladher expect a 40 bps YoY contraction in gross margin from 15.4%.
“Gross margin enhancement would be the critical factor to watch as the management in the previous quarter had indicated that inflationary stress was more acute at lower price points in
discretionary non-FMCG categories,” brokerage ICICIdirect said in its report.
The number of new stores added by the company in the last quarter was moderate at 4, taking the total count to 306 as of December 31.
This was much lower than the expectations of analysts. Brokerage Motilal Oswal Securities expected the retailer to add 12 stores in the third quarter and take the total count to 314.
The brokerage expects the company to cumulatively add 45 stores in FY23.
While the store count was lower, Kotak Equities believes this could be made up for in the March quarter.
Among the key monitorables will be planned store additions for the next quarter, margin trajectory, inflation trends, and growth in specific high-end categories.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
Denial of responsibility! NewsBit.us is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
