Goldman Sachs sees over 50% upside in DMart; should you buy?

NEW DELHI: Shares of Avenue Supermarts, which operates a retail chain under the DMart brand, advanced as much as 5.46 per cent in Monday’s trade after global financial services firm Goldman Sachs initiated coverage of the stock with ‘Buy’ rating and set a target price of Rs 1,586.

The target price indicates that Goldman Sachs see more than 50 per cent upside in Avenue Supermarts against Monday’s closing price of Rs 1,028.85.

The scrip was trading 3.52 per cent up at Rs 1,065.10 on Tuesday around 10.20 am (IST). Shares of the company opened at Rs 1,059.90 and touched a high and low of Rs 1,085 and Rs 1,054.75, respectively, in trade so far. Benchmark BSE Sensex was down 76 points, or 0.24 per cent, at 31,550.

Goldman Sachs believes that EBIT of the company is likely to grow 13 times in the next 10 years. It also added Avenue Supermarts to conviction list.

Value investor Vishal Khandelwal of SafalNiveshak.com in a chat with ET Now said, “Avenue Supermarts has one of the best inventory turnovers in the industry. Core of being a value investor comes out very well in D-Mart’s annual report.”

For the quarter ended June 30, 2017, the company reported a net profit of Rs 174.78 crore, up 48 per cent, against Rs 118.45 crore in the corresponding quarter last year. Net sales of the company jumped 35 per cent Year-on-Year to Rs 3598.13 crore during the quarter under review.