HSBC sees 21% upside in DMart supermarket chain, upgrades stock to ‘Buy’
HSBC said that the third quarter of 2023-24 could register a meaningful revenue growth recovery for Avenue Supermarts, which can prove to be another booster dose for the share price.
Avenue Supermarts Ltd, the owner of the DMart supermarket chain, was in focus on Thursday after global financial services firm HSBC turned bullish on the stock.
HSBC upgraded the Avenue Supermarts stock to a ‘buy’ from ‘hold’ earlier. It also raised the target price on the share to Rs 4,600 apiece from Rs 4,000 earlier.
This translates into a potential upside of nearly 21 percent compared to the stock’s previous close of Rs 3,810 on BSE on Wednesday.
Explaining the rationale behind the upgrade, HSBC said that Avenue Supermarts’ growth in recent quarters was being dragged by weak merchandise sales and slower store expansion. But, the risk-reward profile is looking appealing now.
“There is renewed sense in DMart that the network rollout is the source of its value creation,” HSBC said in its note.
It also pointed out that the impact of the general merchandise is on the wane, with DMart also planning an overhaul in the fashion segment.
HSBC said that the third quarter of 2023-24 could register a meaningful revenue growth recovery for Avenue Supermarts, which can prove to be another booster dose for the share price.
“Valuation is more appealing now,” HSBC concluded on the DMart stock.
On Thursday, shares of Avenue Supermarts were trading at Rs 3,817.25 apiece, up 0.2 percent, at 9:31 AM on BSE. The stock is up nearly nine percent in the last one month. Shares of the company have dropped almost 15 percent in the last one year.
The company was in the news last week after it bought commercial property worth Rs 88 crore in Mumbai to open new stores. The commercial units are located in the Kandivali West area.
(Edited by : Asmita Pant)
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