JM Financial bullish on Avenue Supermarts has recommended buy rating on the stock with a target price of Rs 1705 in its research report dated June 14, 2018.
JM Financial's research report on Avenue Supermarts
Some ‘pearls of wisdom’ from DMart’s maiden post-IPO management meet: 1) It would be extremely foolish to not leverage the company’s best-in-class cost efficiencies to offer the best prices to consumers and ring-fence them. If competitors cut prices, DMart will cut even more. 2) Inflation is good for consumer businesses as it provides higher ‘value-growth’ and lends some sort of leverage and margin support. 3) Retail opportunity in India is so large ($616bn in FY16, set to rise to $960bn by FY20; DMart is yet to set up shops in states that account for c.45% of the country’s retail spends) that there is no point worrying about competition and would advise competitors to also not to worry about competition. 4) It is not prudent to take a global perspective of things in retail – each store is different and strategies need to be tweaked to suit the context.
Outlook
Management did not outline any big ambition or new vision statement as such, but said enough to give confidence that DMart is a business with a long growth runway - a quintessential earnings-compounder. We remain bullish.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.