Avenue Supermarts falls 2% post Q2 nos; Citi maintains sell, cuts target to Rs 1,255/share

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Morgan Stanley said it remains underweight on Avenue Supermarts with a target of Rs 1,120 per share. Credit Suisse maintained its neutral call on the stock due to stretched valuations and retained its target of Rs 1,850 per share



D-Mart operator, Avenue Supermarts has posted a 47.54 percent year-on-year jump in its net profit at Rs 322.63 crore for the quarter ended September. Revenue increased 22.26 percent to Rs 5,998.90 crore.

Earnings before interest, tax, depreciation, and amortization (EBITDA) rose 32.3 percent to Rs 515.4 crore and EBITDA margin was up 8.66 percent.

After its results, Morgan Stanley said it remains underweight on Avenue Supermarts with a target of Rs 1,120 per share. The foreign brokerage said the Q2 numbers were an all-round miss.
Credit Suisse maintained its neutral call on the stock due to stretched valuations and retained its target of Rs 1,850 per share. It continues to remain positive on the long-term prospects of the company
Citi has maintained its sell rating on the counter and cut its target price to Rs 1,255 from Rs 1,550 per share. "The Q2 numbers were below estimates as revenue per square feet contracts, while business upsides appear priced in. The FY20/21 EPS estimates were raised by 13-14 percent to incorporate the corporate tax cut and we see no room for error on store expansion and operating metrics," it stated.
Prabhudas Lilladher has a reduce rating on the stock with a target of Rs 1,647 per share. Absolute returns look unlikely in the near term after the 48 percent surge in the stock in the last five months, it said. However, it was quick to add that sustained growth momentum could provide 20-25 percent returns over the next 2-2.5 years.
The rating agency, CRISIL has reaffirmed AA+/stable rating to the bank loan facilities of Rs 750 crore of the company.
At 09:22 hrs Avenue Supermarts was quoting at Rs 1,821.05, down Rs 22.20, or 1.20 percent on the BSE.

Source by: Moneycontrol
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