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D-Mart (Avenue Supermarts)
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| D-Mart |
Today on 11 Jul, 2020 the Q1 Results of Avenue Supermarts were published on the official website of BSE (Bombay Stock Exchange)
Directly talking about the unaudited consolidated results, we can see results of Q1FY20, Q4FY19, and lastly the results of Q1FY19 in the Presentation.
By observing the representation of the results of various quarters we get to know the following:
Income of the Company has fallen from 6290.78 Crores to 3933.78 Crores in this Quarter and according to Year-on-Year (YoY) basis, the Consolidated Income of the company has fallen from 5825.51 Crores to 3933.78 Crores.
This data is surprising because during the fall in the March month this Stock made a low of around 1286 Rs. without any bad news around it. But now the Results of Q1 is the bad news revolving around this Stock, so now it will be hard to say where will be the support of the stock price in the coming days.
Now moving to the Expenses of the company, the company had made expenses of around 5318.64 Crores during the Q1 2019 and in the last quarter company managed to make expenses of around 5957.53 Crores.
But due to lower income in the Q1FY20 the company reduced its expenses to 3875.01 Crores, which also can be due to the Lockdowns which the company has to be faced. The reason is also simple because the company cannot afford more expenses than its Income because it can affect the balance sheet of the company badly. Already lower income is affecting the balance sheet of the company and it cannot afford negative numbers in the balance sheet.
The Company has also thought of the decreasing demand in the coming quarters which should have led the company to reduce its expenses and grow slowly without affecting the Balance sheet.
- Net Profit After Tax (NPAT)
If we compare Quarterly, the Net Profit of the company has slipped from 271.28 Crores to 40.08 Crores which means an around 85% reduction in the Net Profits has happened Quarterly.
Now coming to YoY Net profits the company has reduced the profits of around 86.5% from 323 Crores to 40.08 Crores which is a very big amount of decrease in the Net Profits of the company YoY.
Basic EPS for Q1FY20 is at Rs. 0.77, as compared to Rs. 5.37 for Q1FY19. This type of fall in the EPS shows that there is a big correction to come in this share in the coming days.
The analysis of the share shows that there are chances of a correction from the current levels. As before when the share got down to around Rs. 1286 it revived from that levels and made a high of Rs. 2560 during the lockdown in a fractured economy, which shows that there was a FOMO buying in the shares because nobody wanted to miss-out the chance of buying this great Stock at such a lower price, which led to its high pricing and now it's the time for this stock to show a correction of around Rs. 1500 approximately.
The latest supports of this stock are being mentioned below by myself. It would be helpful because if you have this stock in your Portfolio it will tell you the right time to exit from this stock.
Once you exit on the right time it will be easy for you to buy it on the levels below 2000. This stock is capable of us buying it on dips that means we should buy this stock at every level below 2000 which will make our portfolio even stronger during the upcoming crash.
Checkout the chart given below.
To open the image in your browser fully Click here. There will be a price fall in the company in the coming days. I think that this time is the exit level from the stock, but that doesn't mean that the stock is bad or the fundamentals are not good.
D-Mart's business is mainly impacted because the Non-essentials were not allowed to be sold in the stores of D-Mart and if the Non-essentials are deducted then the company was operating only on the levels of 50%.
After seeing the operational level of the company, the decrease in the Net Profit is acceptable by the company.
One plus point is also that the company is the biggest in Market Capitalization in the sector, and if this company is affected badly, then you can think about how the other competitors would be affected due to this.
The company is facing an external problem that can be fixed in the long-term. If the company would have been affected due to any internal issue, then it would be wrong to buy for you.
So I think you should consider buying this stock when it comes to around less than Rs. 2000, but you should have a long-term view in this stock.
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