DMart share price extends rally for fifth session, up over 7% this week; CLSA initiates coverage with a ‘Buy’ call

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Avenue Supermarts, the DMart retail chain operator, with a ‘Buy’ rating and a target price of ₹5,107 per share, implying an upside of over 22% from Thursday’s closing price. According to CLSA, DMart is rapidly scaling its private-label offerings, which could drive the next leg of share gains.

Also Read: TCS, Wipro to Infosys: Why are Indian IT stocks falling after Accenture share price crash — explained DMart is a discount retailer in India’s $500 billion urban food and grocery market with the lowest operating costs, which have driven the lowest consumer prices, in turn leading to high sales velocity and better scale, further reducing costs - a virtuous loop that allows DMart to gain market share in a price-sensitive market, CLSA noted. The brokerage firm sees total addressable market (TAM) growing to $2.3 trillion in 25 years, with DMart’s share rising to 5% from less than 1% at present.

DMart stores are expected to increase over 3x by FY34 from 341 at present as the company expands its presence in present and new states. “If DMart reaches a similar store-to-population density as Walmart, which has a store per 100,000 people in the US, we see the potential for over 7,000 DMart stores in urban India in the next 25 years," CLSA said.

Also Read: IDFC First Bank share price in focus after MD & CEO gifts 7 lakh equity shares to 5 people not related to him The Radhakishan Damani-led Avenue Supermarts operates on an everyday low cost, everyday low price model (ELDC/ELDP) and its low prices have been a key competitive advantage, which along with consistent and efficient execution has allowed the company to gain market share in overall grocery retail between CY14 and CY23. Moreover, CLSA believes private labels can be a key