Goldman Sachs initiated coverage on Avenue Supermarts, which runs the D-Mart retail store. The global financial services behemoth has a buy rating on the stock with a target price of Rs 1,586, implying an upside of more than 50% from the current levels. Shares of D-Mart surged 18% to Rs 1,212 on Tuesday afternoon as the investors cheered the news! The shares had more than tripled at yesterday’s closing price to Rs 1,029, as compared with the issue prcie of Rs 299. 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 its conviction list.
In an interview to ET Now, Vishal Khandelwal of SafalNiveshak.com 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.”
Billionaire Radhakrishnan Damani owned Avenue Supermarts has had dream run at the bourses so far, after having a blockbuster listing.The stock had made a mega entry in the market with a bumper listing pricing of Rs 606 at the NSE as against its issue price of Rs 299 per share on March 21, 2017, implying listing gains of more than 100%. In just five months Avenue Supermarts has more than tripled investor wealth against the issue price of Rs 299.
In fact, earlier this month, Ashburton Investments which manages assets to the tune of a staggering $10 billion globally and is also a prominent investor in Infosys, rued that it had missed the bus on D-Mart. In conversation with ET Now, Jonathan Schiessl, the chief investment officer at Ashburton Investments said that he initially felt that the company was overvalued. Jonathan Schiessl said earlier this month, “We did a lot of work on that and decided to stay away. The valuation just kept us away. Sometimes you just need to bite the bullet.”
Avenue Supermarts, which owns DMart chain of supermarkets had reported a 47.60 per cent year-on-year (YoY) rise in net profit at Rs 174.77 crore for the June quarter. Total income also registered gains of more than 36 per cent.
Several analysts had recommended subscribing to issue given the company’s strong financial and operational profile, and its promising growth record over the years. Radhakishan Damani, promoter of the company is a veteran stock market trader and investor who had been in the Forbes list of wealthiest people.