DMart share price falls over 4% after Q2 results miss estimates; should you buy, sell or hold?

livemint.com:

₹3,771.70 apiece on the BSE. Avenue Supermarts, the operator of DMart retail chain, on October 14 reported a consolidated net profit of ₹623.35 crore for the second quarter FY24, registering a drop of 9.09% from ₹685.71 crore in the year-ago period. The company’s consolidated revenue from operations in Q2FY24 grew 18.66% to ₹12,624.37 crore from ₹10.638.33 crore, YoY.

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) during the quarter stood at ₹1,005 crore, as compared to ₹892 crore in the corresponding quarter of last year. EBITDA margin compressed to 8.0% from 8.4%, YoY. Read here: DMart Q2FY24 results declared. Total revenue of Avenue Supermart jumps 18.5% to ₹12,308 crore “Our gross margins continue to be lower compared to the same period in the previous year due to lesser contribution from the higher margin General Merchandise and Apparel business," said Neville Noronha, CEO & Managing Director, Avenue Supermarts.

Here ‘s what brokerages have to say on Avenue Supermarts Q2 results and stock price: Avenue Supermarts, after a positive spurt in productivity again reported a miss with EBITDA up only 12% YoY as General Merchandise & Apparel (GM&A) share stayed below pre-covid and was even down YoY, a surprise. SSSG for H1FY24 at 8.6% was stable, in-line with our annual estimate of 8.5%. Productivity recovery/footfalls without commensurate mix improvement is concerning.

Hence, we adjust our estimates for lower GM&A share/gross margin. Also, store addition, while bunchy, has a steep catch-up in H2FY24. We adjust that also lower, leading to a 6% PAT cut, Nuvama said.