Radhakishan Damani’s DMart rises on Q1 biz update, analysts unimpressed

Motilal Oswal Securities said revenues at Rs 5,031.75 crore in the June quarter were 5 per cent below its estimate and 13 per cent below pre-Covid levels. It noted that the management has refrained from providing an outlook, which had been the norm, given the weak market environment.

That said, Motilal’s channel checks suggest that the non-discretionary category has seen a healthy recovery to near pre-Covid levels, post the lifting of lockdown restrictions. The brokerage has a target of Rs 3,105, which suggests a downside from the prevailing levels.

On Monday, the scrip rose 1.7 per cent to hit a high of Rs 3,369.80. The scrip has climbed 47 per cent in the last one year and 117 per cent in last three.

DMart said its sales fell 31 per cent sequentially and were down 13 per cent compared to the June quarter of 2019.

New store additions in June quarter stood at 4, with the total number of stores at the end of the quarter standing at 238.

Motilal Oswal expects 30 store additions in FY22, implying an additional 26 stores in the next three quarters.

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The company is scheduled to report its quarterly earnings on July 10.

Global brokerage Citi has maintained ‘sell’ rating on the stock with a target of Rs 2,210. It complained of a much slower-than-expected start to FY22. This brokerage said reported revenues were 20 per cent below its estimates.

“Given last year’s base, Q1 was perhaps a key driver of the sharp rebound forecast,” it said, adding that further downside to earnings is likely.

Morgan Stanley sees the stock at Rs 3,218 while JP Morgan has a target of Rs 2,700 on the stock. Macquarie, meanwhile, has a target of Rs 3,700 on the stock.