Avenue Supermarts Says Business Outlook Hinges On Pandemic Trends, Lockdowns
A pedestrian walks past a DMart supermarket operated by Avenue Supermarts Ltd. in Thane, Maharashtra, India. (Photographer: Dhiraj Singh/Bloomberg)  

Avenue Supermarts Says Business Outlook Hinges On Pandemic Trends, Lockdowns

Avenue Supermarts Ltd. said its business will continue to depend on how the pandemic trends further and the consequent restrictions for operating its stores at a time the nation battles a second wave.

“Due to increased Covid-19 cases since March 2021 several restrictions have been put in place in certain cities and towns where we operate. Enforcements vary from restricted hours of operation, to store closures on certain days of the week, to abrupt shutdowns for a continuous week or more,” according to quarterly business updates of the owner and operator of DMart supermarket chain released on the stock exchanges. “Several stores have been restricted to sell non-essential products on certain days of the week or for continuous period of at least up to the end of April 2021.”

Stores that are two years and older, according to the Radhakishan Damani-promoted company, saw 6% growth in January-February compared with the same period a year ago. These stores saw a contraction of 9.4% for the first 15 days of March against the first 15 days of March 2020, primarily due to full or partial lockdowns implemented from the start of March across cities due to increase in Covid-19 cases, the filing said.

The second fortnight of March, it said, showed significant growth compared with the same period a year earlier due to a lower base as lockdown measures in some form began from March 16, 2020 and within days “culminated into a full scale countrywide lockdown”.

Avenue Supermarts’ current store count stands at 234, as it opened 22 new outlets and converted two into fulfillment centres for Avenue E-Commerce Ltd. during 2020-21.

The company reported a nearly 18% year-on-year rise in standalone revenue at Rs 7,303 crore in the quarter ended March, subject to audit by its statutory auditors.

“While near-term operating performance will be guided by the pandemic trend, we see these concerns as temporary, and as Covid-19 fears recede, a strong revenue rebound is imminent,” HSBC Global Research said in a note. It expects Avenue Supermarts’ profit to more than double between FY21 and FY23. “Dmart is ramping up its online capabilities in key cities, alleviating concerns over it taking the online threat too lightly,” the financial services provider said.

Shares of the DMart chain operator rose as much as 1.1% to Rs 2,879 apiece before paring gains. Of the 30 analysts tracking the company, 11 have a ‘buy’ rating, nine suggest a ‘hold’ and 10 recommend a ‘sell’, according to Bloomberg data. The stock is trading near its 12-month consensus price target of Rs 2,839.1 apiece.

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