Rs 620 to Rs 4,900: This multibagger stock gave a return of 700% in five years. Do you own it?

An amount of Rs 1 lakh invested in Dmart in March 2017 would have become Rs 8 lakh in November 2021.

With strong fundamentals, the stock of multibagger Dmart rallied from Rs 620 in November 2020 to Rs 4,900 today, surging 8x times in less than five years. An amount of Rs 1 lakh invested in March 2017 would have become Rs 8 lakh in November 2021.

In 2021 alone, the stock has rallied from Rs 2,789 in January to Rs 4,900 today, registering a return of 75% in 11 odd months. Rs 1 lakh invested in January 2021 would have become Rs 1.75 lakh today.

Avenue Supermarts is primarily engaged in the business of organized retail and operates supermarkets under the brand name of D-Mart.

Competitive strengths

Store network: Avenue Supermarts operates 234 stores across 11 states and one union territory with an 11.8 million square feet retail business area. AVL has its highest presence in Maharashtra with 58 stores and followed by Gujarat with 26 stores. Presence is limited to western and southern Indian States as the company follows cluster-based expansion resulting in a low-cost structure.

Steady Store network expansion: DMart’s core business model is driven by value retailing and the company has opened 30 new stores in the FY21-22 so far and the company is focusing on penetrating Tier 2 & 3 cities where there is an absence of organized large retailing.

Financials

Total revenue for the quarter ended September 30, 2021, stood at Rs 7,789 crore, as compared to Rs 5,306 crore in the same period last year, which is a YoY growth of 47%. EBITDA in Q2FY22 stood at Rs 669 crore, as compared to Rs 330 crore in the corresponding quarter of last year, which is a YoY growth of 106%. EBITDA margin stood at 8.6% in Q2FY22 as compared to 6.2% in Q2FY21.

Net Profit stood at Rs 418 crore for Q2 FY22, as compared to Rs 199 crore in the corresponding quarter of last year, which is a YoY growth of 113%. PAT margin stood at 5.3% in Q2FY22 as compared to 3.7% in Q2FY21.

The company has posted exceptional revenue and profit growth in the last 3 to 4 quarters, the anticipation of strong growth in revenue, profit and improved margins has made the stock rally in 2021. 

Do you think Dmart can sustain the rally with their strong earnings growth in future?