Majority of brokerages expect the company to report a revenue close to Rs 10,400 crore, rising on both yearly and sequential basis. Net profit is likely to remain around Rs 650 crore, dropping from the June quarter but higher on a yearly basis.
Market analysts suggest that the company may report EBITDA more than Rs 1,000 crore with an EBITDA margin close to double digits, but both are likely to take a hit in comparison to the quarter ended June.
Avenue Supermarts reported 36 per cent YoY and 6 per cent QoQ growth in revenues in 2QFY23, as per the company’s quarterly update.
Nirmal Bang Institutional Equities expects a 45 per cent year-on-year (YoY) growth in profit after tax (PAT) to Rs 650.7 crore with a 36 per cent rise in the revenue to Rs 10,384.7 crore in the September quarter.
The brokerage firm is expecting EBITDA to rise 44 per cent to Rs 9,636 crore, whereas EBITDA margin is likely to rise 50 basis points (bps) to 9.3 per cent from 8.8 per cent in Q2FY23.
Avenue Supermarts’ 91 per cent recovery versus pre-covid figures (on revenue/ sq.ft.) was marginally below expectations, it said. “We still expect gross margins to improve 60bp YoY on normalizing sales mix,” it added.
However, other analysts believe that mid-premium segment retailers will outperform the larger peers due to the impact of inflation, denting the value in customers’ money.
Centrum Broking expects pressure to continue on its general merchandise (GM) and apparel segments as consumers of DMART continue to feel the pinch of inflation.
It is expecting an revenue of Rs 10,384.7 crore with a PAT of Rs 665.5 crore and EBITDA of Rs 987.5 crore. EBITDA margin is likely to remain at 9.5 per cent.
According to Centrum, revenue will increase on both YoY and QoQ basis, but the bottomline and operating profits may drop around 2 per cent on a QoQ basis. EBITDA margin may compress by 80 bps on a sequential basis.
Axis Securities expects Avenue Supermarts to report a 4 per cent rise on a QoQ and 34 per cent on a YoY basis to Rs 10,374 crore, with a PAT at 644 crore, up 54.2 per cent on YoY basis, but almost flat in sequential terms.
The brokerage expects 115 bps rise in EBITDA margin YoY to 9.7 per cent, but on a sequential basis it may drop by up to 31 bps. EBITDA is expected to be around Rs 1,016 crore, flat on a sequential basis but about 52 per cent up on YoY basis.
The performance is likely to remain healthy on the back of aggressive store expansion, sequential improvement in general merchandise, said the market analysts.
Revenue growth is on expected lines and seems to be driven by a revival in same store sales growth (SSSG) as well as contribution from 8 new stores, said Kotak Institutional Equities.
The opening up of larger-size stores in the last 2-3 quarters has resulted in lagged throughput recovery, it added. “We expect EBITDA margins of 9.3 per cent to be lower by 100 bps on a QoQ basis due to the seasonal weakness and lower GM.”
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