Shares of Avenue Supermarts Limited, renowned for its DMart chain of stores, witnessed a substantial surge of 6% to reach Rs 4,715, marking a new 52-week high on the morning of April 4. This surge was ignited by the company’s announcement of a remarkable 20% rise in standalone revenue for the March quarter.
As of 9:40 am, the stock was trading at Rs 4,667, reflecting a notable increase of 4.6% from the previous close. Notably, the share has demonstrated an impressive surge of over 20% in the past month alone.
Avenue Supermarts reported a robust revenue of Rs 12,393 crore in the final quarter of FY24. Subsequently, Morgan Stanley, reaffirming its “overweight” call, maintained a price target of Rs 4,695, a threshold that has already been surpassed by the stock.
The remarkable revenue growth, surpassing the 18% witnessed in the preceding nine months of FY24, was largely driven by a noteworthy same-store sales growth (SSSG) of 11%, as highlighted by the brokerage. This SSSG figure stands as the highest recorded by the company in the past five quarters.
In a move reflecting growing confidence in the supermarket chain’s future performance, CLSA announced on April 2 an upward revision of its target price for the stock to Rs 5,514 from Rs 5,307, while simultaneously reaffirming its “buy” recommendation. This strategic adjustment follows the company’s achievement of a record high in quarterly store additions, signaling robust growth potential in the retail sector.
The revised target price, marking the second such adjustment within a week, represents a substantial 23% increase over the stock’s closing price of Rs 4,460 on April 3. This notable uptick underscores CLSA’s optimistic outlook on the stock’s trajectory and its potential to deliver substantial returns for investors.
It’s noteworthy that CLSA had initiated coverage of the company on March 21 with a “buy” recommendation, highlighting the promising growth prospects in previously untapped markets. The decision to upgrade the target price further underscores CLSA’s confidence in the company’s ability to capitalize on emerging opportunities and solidify its position in the competitive retail landscape.
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