InvestorQ : Why did the stock of Avenue Supermarkets fall so sharply on 13 July?
NISHA Nayak made post

Why did the stock of Avenue Supermarkets fall so sharply on 13 July?

Answer
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3 months ago


Avenue Supermarts fell 6% in the midst of a robust market as the numbers really disappointed the street for the Mar-20 quarter. Net profits had fallen by 87.61% due to the lag effect created by the lockdown. D-Mart’s PAT margin also declined to as low as 1% from a level of 5.5% a year earlier. Even revenues were down by more than a third in Mar-20.

The company confirmed that the restrictions had a significant impact on operational and financial performance of the company during the Mar-20 quarter. Total revenues, EBITDA and net profits for the Mar-20 quarter were significantly lower on a YOY basis. As of July 2020, nearly 20% of the stores of Avenue Supermarts are still shut due to lockdown.

Most brokers have given sell calls on the stock with the worst case scenario predicting up to 35% lower price targets compared to current market prices. Lower merchandise sales were on account of lower demand and the lack of permission to sell non-essentials in stores located in certain areas. Most brokers have cut earnings estimates by up to 15-20%.